| For a business owner seeking general insurance, | | | | insurance agents are not as qualified or have |
| the difference between a business insurance | | | | more experience than brokers do. However, |
| agent and broker is not just a matter of | | | | brokers tend to handle a larger portfolio and |
| semantics. There are sufficient distinctions | | | | normally have a wider range of experience with |
| between the two that can influence whom you | | | | business insurance than the average agent. |
| should insure your business with. | | | | Fees and premiums |
| Both business insurance agents and brokers are | | | | The level of service and higher duty is not a free |
| insurance intermediaries who assist business | | | | bonus with brokers. Brokers may charge a fee |
| owners with insurance decisions. Typically | | | | for their service or offer higher premium than the |
| insurance agents deal with a particular insurer | | | | base premium. Agents are not allowed to do the |
| (captive agents). Also, agents do not procure | | | | same, since they do not have a similar level of |
| insurance contracts, but merely recommend | | | | accountability to clients and are usually captive |
| them. Even independent agents deal primarily with | | | | agents. |
| one insurer- the difference being that they are | | | | Special deals and arrangements |
| allowed to recommend any product from any | | | | As a result of their networks and experience, |
| company to a client. Brokers procure insurance | | | | brokers can arrange special deals or contract |
| contracts on behalf of their clients. | | | | arrangements for clients. A broker has the power |
| A broker should not be automatically superior to | | | | of negotiation with insurers, whereas an agent |
| an agent and vice versa. However, there are | | | | typically has to present the insurer's package to a |
| certain distinctions that should indicate whether | | | | client and is unable to effectively negotiate terms |
| you should consult an agent/broker or both in | | | | and conditions of the business insurance contract. |
| seeking certain types of business insurance. | | | | As a result, it is easier to get what you want or |
| The key differences between insurance agents | | | | need from a broker. |
| and brokers can be categorised as follows: | | | | Options for clients |
| 1) Duty to clients | | | | Business insurance brokers and independent |
| 2) Qualification and experience | | | | agents are free to deal with any insurer that they |
| 3) Fees and premiums | | | | choose. Captive agents usually offer fewer |
| 4) Special deals and policy arrangements | | | | options to clients and may not always be in a |
| 5) Options for clients | | | | position to recommend alternatives. Brokers and |
| Duty to clients | | | | independent agents differ because independents |
| A business insurance agent has an administrative | | | | agents tend to have one or two companies that |
| liability to clients. Brokers have that liability and a | | | | they work with on a regular basis. As a result of |
| legal obligation to their clients as well. Agents are | | | | their higher duty to their clients, brokers must |
| merely facilitators- representatives of a particular | | | | attempt to find the best arrangement for their |
| insurer (or insurers in the case of independent | | | | clients. That fact and the brokers' negotiating |
| agents). Agents have a responsibility to both the | | | | power enable the broker to provide better |
| insurer and the client and ensure that the client | | | | options for a client. |
| provides all necessary material for an application | | | | One of the critical insurance decisions that a |
| to be underwritten. Brokers have a legal duty to | | | | business owner may have to make is which |
| their clients and can even be held liable for not | | | | insurance intermediary to choose. In some cases, |
| fully fulfilling the request of a client. Brokers | | | | it may actually be appropriate to choose an agent |
| therefore have a higher duty towards their clients. | | | | if the insurance needs are straightforward and the |
| Qualification and experience | | | | business owner requires the best deal with basic |
| Both agents and brokers require licenses to | | | | criteria. However, for larger and more intricate |
| operate. However, brokers require a special | | | | contracts, a broker has the position and |
| license or, in some cases, a higher mark in the | | | | experience to procure what is required. Clearly, |
| same licensing exam. Brokers generally have | | | | the choice between a broker and agent is not |
| higher qualifications and experience than agents. | | | | just a matter of preference. It can significantly |
| This does not suggest that some business | | | | influence how well your business is protected. |