What Is an Insurance Broker: The Best Career Path

One of the first insurance-themed questions that many people wonder is ‘What is an insurance broker?’.

To put it simply, an insurance broker is an intermediary between an insurer and the insured. They are licensed individuals who can sell insurance and work with multiple insurance companies. According to IBISWorld, as of 2021, there are around 412,850 insurance brokers and agency businesses in the United States.

When you choose a career as an insurance broker, you are helping consumers find policies that best fit their requirements. By the same token, insurance brokers represent consumers and not insurance companies.

As a broker, you can choose to specialize and be licensed in one line of insurance, or multiple lines. The kind of insurance lines you sell can be health, life, P&C, or specific niche insurance products. For the most part, the main aim of a broker is to provide services as per their clients’ insurance needs.

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Responsibilities of a Broker

All insurance brokers in the United States are regulated by the state they work in. According to Find Law, each state has its own set of requirements, mandatory courses, and examinations. After that, an individual can get an insurance broker license. Note that a few states require existing insurance brokers to take periodic courses to maintain their license.

With the help of these courses, you will gain a fundamental knowledge of insurance as well as the necessary insight into the field as a new broker.

You are required to be well informed about the lines of insurance you sell, as well as the relevant claims.

For example, as an insurance broker, you can explain to the client what their policy covers and what exclusions it has. With this information, the client can make an informed decision about what type of insurance they need and the coverage amount.

Ultimately, these are the responsibilities of a broker:

  • To assist clients with their insurance
  • Help them understand their liabilities
  • Provide a helping hand in managing their risks.
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How Can You Provide Service?

As a broker, you are primarily helping clients identify the liability risks that they have. You can assist clients in selecting the right policy for their home, business, family, automobile, or personal assets.

In addition to that, you can also guide clients as they complete their paperwork and provide them with a variety of quotes to choose from. This also includes explaining the terms and conditions along with the benefits of adding necessary endorsements to their policy.

In comparison to an insurance agent, brokers have the freedom to access many policies offered by a variety of insurance carriers. In some cases, you might also have access to policies that are not available to most agencies. Having a large selection of policies to choose from can help your clients in getting the best coverage to fulfill their needs.

Furthermore, as a broker, you are also advising clients on their insurance choice based on their budget. If you understand your client and their insurance history well enough, you can possibly find and negotiate lower rates for them.

Even after a client has purchased insurance, an insurance broker can still provide additional services. You can help clients by advising them on technical issues related to filing claims, changing their insurance policies, and educating them about the details of their existing policy.

All in all, a broker is there to help clients every step of the way as they become insured.

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How Do Brokers Get Paid?

A broker is licensed by the state and is required to keep the needs of their clients first. As a result, having such a duty ensures that a broker will keep the best interests of their client in mind. 

Insurance brokers make most of their income via commissions. Their commissions are a percentage of the premium cost and these rates differ according to state laws.  

Like insurance agents, brokers rely on business from their existing clients. This way they can earn additional commissions when their clients need a new insurance policy or have to renew their current policies.  

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What Is the Advantage For You?

Generally speaking, people and businesses prefer working with an insurance broker as they save their clients time and money. If a client chooses to work with you, you can provide them with better rates on insurance policies by finding them various coverage options. You’ll have access to a wide range of policies and carriers. Furthermore, insurance companies are more inclined towards offering larger brokers special prices on their policies.  

Remember that as an insurance broker their duty is towards the client. Your goal is to provide them with a stress-free option of selecting their insurance policy. Thus, by providing efficient service and assisting them in getting a reliable and cost-effective insurance policy, you’ll gain their loyalty and appreciation.  

If you look at it from the perspective of the client, when they choose to work with you, they won’t have to go through a hectic process. Nor will they have to go through the stress of learning new things associated with purchasing insurance because you’ll be guiding them through each step. 

Should You Become an Insurance Broker?

Overall, as an insurance broker, you are an intermediary who foremost works for the clients. Your goal is to provides them with top-quality insurance. Helping your clients, knowing their requirements, and building a comprehensive insurance plan for them is how you can best cater to their needs.

Did you find this insurance blog helpful? Do let us know your thoughts in the comments below.

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