TLTR: This article answers the question, “What is an agent?” It explains the duties and responsibilities that come with the job, and lists the steps you can take to become an insurance agent.
Every type of job begins somewhere. And each job is a door that potentially leads to a larger organization or a new industry. And within each industry there are different positions and roles that keep things running. The insurance industry, for example, consists of skilled professionals filling roles such as agents, brokers, producers, and underwriters, to name a few.
In this article, we’re going to focus on the position of insurance agent.
What is An Agent?
An insurance agent is someone who promotes and sells insurance products and services to clients. Often times, customers aren’t sure exactly what type of policy they should have. An agent is there to assist them in getting the right coverage to fulfill their insurance needs.
All insurance agents don’t sell exactly the same types of policies. Some may specialize in specific types of insurance, such as life insurance or health insurance, depending on the training and expertise they get from working in the industry. Other agents might cater to both commercial and P&C insurance such as car insurance and homeowners insurance.
Agents are also responsible for building up their customer network and networking contacts. They can achieve this by learning from veteran agents and through hands-on work experience.
In the process of selling insurance and helping their clients, agents also represent the insurance company they are associated with. When agents approach clients or businesses, their way of communication, conduct, and response to the client will reflect on the insurance company they are working for.
What Does an Insurance Agent Do?
Besides selling insurance to different individuals and businesses, insurance agents have additional responsibilities as well. Here are some additional duties of an agent:
- Reaching out to new clients and businesses
- Processing insurance applications and claims
- Calculating premiums
- Learning about client payment methods
- Risk assessment
- Maintaining company database and bookkeeping systems
- Overseeing insurance claims
- Assisting clients with settlement claims
- Creating custom policies as per client’s needs
Put simply, insurance agents are the bridge between insureds and insurers. Agents are the people to contact when a client needs to buy a new policy, file a claim, or seek a policy renewal.
Different Types of Agents
Insurance companies typically hire four types of agents to sell their products. They are independent agents, captive agents, exclusive or proprietary agents and managing general agents (MGAs).
Independent agents mostly work by themselves, and aren’t tied to any carrier. They are free to choose what insurance carrier policies they want to sell. But they can represent multiple insurance carriers at once. They also receive a commission fee for every sale. The more policies an independent insurance agents sell, the more they make on commissions.
Captive agents work with one specific company and represent only them. This allows an insurer to create its own brand of agents who are loyal to them. A captive agent receive a steady paycheck from the insurer and have limited autonomy. They’re also restricted in terms of the products they can sell, their commission rates, and the policies they can write.
Exclusive or proprietary agents only represent one insurance company. As a result, they have limited flexibility in what policies they can sell. The main benefit of being an exclusive agent is that the insurance company will compensate them well for their loyalty and work.
Managing general agents (MGAs) manage the products an insurance company sells. MGAs act as a representative of an insurer. Unlike other agents, MGAs have the authority to underwrite insurance policies. They also oversee what commissions agents get for their sales, what products they can sell, and what types of agents they want on their team. This is the most hands-on approach to selling insurance, because it allows one person to control what happens within an insurance company.
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How To Become an Agent?
If you’re looking to enter the insurance industry as an agent, most states require individuals to get a license. How to get an insurance license?
If you’re interested in becoming an insurance agent, here are the steps you need to follow:
An entry level insurance agent job doesn’t require a college degree, but you should have at least a high school diploma or a GED.
That said, an associate’s degree in business, a bachelor’s degree in business, insurance or investments, and/or a financial planning course can help you get a head start in the industry. Furthermore, with enough experience, you could also aim for upper management level positions in the industry.
Settle For an Insurance Line
Agents can sell property, commercial, life, health, and various other lines of insurance policies. In the beginning, you can choose to sell a single type of policy and then move on to selling more as you move forward in your career. Doing this is completely up to you. But having a definite goal in selling a certain policy can give you the focus you need in order to get started.
Check Pre-licensing Requirements
Every state requires beginner agents to pass a licensing exam for them to be certified. The prerequisites tend to vary by state. You can find your state’s licensing requirements through the National Insurance Producer Registry (NIPR). Knowing exactly what you need to fulfill in order to get your license can be helpful as you are planning your career path.
Enroll In Insurance Courses
Insurance companies don’t expect you to know everything about insurance, but they will have certain expectations. You can enroll in courses that will help you understand the insurance industry and the responsibilities of an agent. Interested applicants can find these through course providers such as AB Training Center, Kaplan Financial, and WebCE to name a few. Depending on the hours you’re able to put into studying, a course can usually be completed in a few weeks.
Attend The Licensing Exam
Once you’ve completed the course work, it’s time to take your licensing exam. It’s best to register and set your exam date while you’re studying. Once you know your exam date, you’re able to work towards it.
After you’ve passed your license exam, you will need to send some documents to your state insurance board. Every state requires applicants to submit their official documents for an assessment to check for their previous work history. Along with these documents, a state exam certificate, biometrics, a citizen affidavit, and a background report also needs to be included.
Before you can become a full-time agent, you usually need what is called “office experience” or any type of work that will give you insight into what happens in the industry. You can gain this experience by working in a lower-level position in the insurance or financial fields, or any related industry.
Advance Your Career
Once you have the relevant educational qualification, professional knowledge and experience as per the state requirements, the next step is finding the insurance company that you want to work with. Then, once you’re ready, you can begin your career as an insurance agent!
How Does an Insurance Agent Earn?
Generally, an insurance agent salary is defined by commissions. It’s the most common form of compensation for agents. The commission amount depends on the type and quantity of insurance policies sold.
Besides commissions, agents can also be paid on a salary basis. How each of them get paid varies depending on which insurance company an agent works for. These methods of payment include:
- Salary only
- Salary and commission
- Commission only
- Salary plus bonus
Note: Bonuses are given to employees when an agency attains or exceeds a profit target.
What Is an Agent’s Salary Range?
As per the Bureau of Labor Statistics (BLS), an agent can earn more than $100,000 in their first year. The median annual wage for insurance sales agents is expected to grow over $52,180 in 2023. The lowest 10% of earners in the industry made less than $29,000, and the highest 10% earned more than $127,840.
Essential Skills for an Insurance Agent
A career in insurance can bring various opportunities to learn. But if you truly wish to excel, it’s best if you have certain skills beforehand or cultivate them as you go. These include:
- Business management
- Product sales experience
- Strong Will
- Positive Attitude
These skills are something you cannot learn from books or courses. You have to get firsthand experience or learn from mentors or fellow colleagues. This is exactly why many beginner insurance agents start off by working alongside experienced agents. It’s a great way to learn about the industry and know more about your fellow insurance colleagues.
According to Deloitte, the global insurance industry is projected to grow by 3% in 2021. Additionally, 61% of insurers in North America are focusing on increasing diversity in leadership, development, and hiring. All of this points to a career as an insurance agent being a viable career choice.
Insurance companies will always have the need for new customers and employees. As time passes, the older, experienced workforce pass the baton to a younger generation of agents who will move the insurance industry ahead.
Insurance agents have one of the most important jobs in the industry. Agents have the opportunity to sell policies, curate client relationships, and grow themselves. With determination and the right mindset, anyone can excel as an agent.
Did you find this article useful? Let us know your thoughts in the comments below.
Feel free to check out our other insurance blogs.
Frequently Asked Questions
How Long Does It Take to Become an Insurance Agent?
Once you’ve submitted your documentation, you can receive your license within 3-4 weeks. However, this time period can vary depending on the state you live in. It’s best to check with your state insurance department for a precise time estimate.
How Can Agents Get Clients?
Insurance agents can get clients through the traditional method of conducting sales calls or through networking with fellow agents. Since time is an important factor, networking among peers is the best way to begin getting leads for insurance. Besides that, you can also opt for insurance directories.
Directories are a list of agents, brokers, and experienced insurance professionals where customers can go insurance shopping. You can become part of a directory and gain the necessary exposure to potential clients.
Feel free to add a listing on our insurance directory today!
Are Insurance Agents Similar to Insurance Producers?
Yes. Both agents and producers have similar job responsibilities. The term “agent” is more commonly known among customers. Whereas, the term “producer” is more well known within the insurance industry.
How Do Insurance Agents Differ from Brokers?
Insurance agents primarily represent insurance companies, while insurance brokers represent the customers and primarily take their needs into consideration.
Is A Career in Insurance Difficult?
Beginner insurance agents can expect a certain level of stress due to the new environment and responsibilities. However, as you gain experience and learn to manage your time, you can attain a manageable work-life balance.
Choosing a career in insurance means that you will need to have a certain mindset to see it through. While it’s okay to quit if things aren’t progressing for you, it’s better to make sure that this line of work is what you want before starting on this path.
February 12th, 2023
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