Question

Distinguish between an insurance broker and an insurance agent

Answer 1

• an insurance agent (also known as captive agent) typically works only for one insurance company
• hence, an insurance agent can sell insurance policies of that company only
• Insurance broker has a distributor relationship with more than one insurance companies
• Hence an insurance broker can sell several polices available in the market
• An insurance agent receives a fixed salary and sales bonus based on performance
• While an Insurance broker will get compensated through commissions paid by each insurance companies for each respective policies sold
• A broker works independently, while an insurance agent is like an employee
• Brokers take more responsibility for customers for choosing better insurance company and chose policies within, while an Agent provides limited options to chose one or more policies from a specific set
• Broker calls a customer a client, while Agent term customer as a customer
• Insurance agents can be reported to IRDAI for any fraud, while legal actions become different for a broker