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What’s the difference between an insurance broker and agent?

Anyone who is looking for corporate health insurance will soon find out that, not only are there many plans to choose from, but there are different distribution channels as well. You can buy directly from an insurance company, through an agent who sells plans on behalf of the insurer or through a broker who finds and compares medical insurance coverage for you. In this Pacific Prime UK article, we’ll make it easier for you to understand the difference between an insurance broker and agent.

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Buying insurance directly from an insurer

Insurance companies are only allowed to sell their own policies. When looking for insurance, buyers tend to assume that buying directly from an insurance company will be the cheapest and easiest option. While this can be this case, the direct approach tends to only work to your advantage if you are familiar with insurance products and the insurance market.

To begin with, it can be difficult for an HR team or business owner to research and compare health insurance plans without an advisor’s insight. The reason for this is that it takes a lot of time to understand, and become familiar with, all the options available to decide if they’re an ideal fit. Without expert advice, there’s a higher chance that you’ll choose the wrong plan for your staff and business, which can ultimately be an expensive mistake. A good agent or broker can provide expert advice at no additional cost.

Even though it’s possible to get a cheaper premium without the help of an intermediary, that often isn’t the case. One reason for this is that insurance companies rely on third parties to bring them business. If the insurance company offers plans that are much cheaper than what they offer clients through intermediaries, those agents or brokers will be less motivated to sell their products.

What’s more, they might stop selling that insurer’s policies entirely. This could dramatically reduce the number of potential customers, which leaves insurers with the expensive task of increasing investment in their own efforts and sales teams.

What does an insurance agent do?

An insurance agent has the authority to sell and even adjust coverage on the insurers’ behalf on occasion – typically with the objective of increasing insurer profit and sales. The main features that set an agent apart from a broker include:

  • Agents are either independent or captive. Independent agents represent several insurers whereas captive agents can only represent one.
  • An agent sells insurance products on behalf of the insurer. Their goal is to find suitable coverage for clients from the insurers they work with.
  • In some circumstances, agents can bind coverage with the insurers they represent, which lets buyers get coverage before the insurer has even processed the application and issued policy documents.
  • An agent earns a stable commission from the insurance companies they’re contracted with. Some captive agents receive salaries.

What does an insurance broker do?

Insurance brokers use their expertise to understand what their client needs, and help them choose the right insurance plan at the best possible price. Unlike an agent, a broker’s job is to act in the client’s best interest as opposed to the insurers’. In addition, brokers:

  • Are independent of any insurance company or agent, and typically offer a wide variety of plans from various insurers
  • Will prioritise clients’ interests over their own
  • Make unbiased recommendations based on the clients’ insurance needs, and may also leverage their close relationships with insurance companies to negotiate conditions or premiums
  • Help clients understand aspects of their policy and point out things that they may not have thought of

The way brokers operate can vary significantly. For instance, smaller brokers may only provide a review of the top plans and help you find a plan that matches your needs. Conversely, larger brokers are capable of offering value-added services, such as renewal support and claims assistance, usually at no additional cost.

Moreover, brokers are specialists in particular products, such as group health insurance, and can provide extra services according to their area of expertise. HR administrators, in particular, appreciate a comprehensive insurance broker. Full-service brokers do all the legwork for you, ranging from claims analysis to employee orientation, so you can focus on more important projects.

Insurance broker vs agent vs insurer benefits

When you’re deciding whether to purchase insurance through an insurance broker, agent or an insurer, it’s best to think about the main benefits of each option.

Broker benefits

  • Put clients’ needs first
  • Expertise in a wider range of insurers and policies
  • Offer unbiased advice on insurance matters
  • Usually provide additional client support (such as claims analysis, claims assistance, etc.)
  • Larger brokers can negotiate benefits and premiums

Agent benefits

  • Some agents can bind coverage
  • Expertise in the insurer(s) they represent and the policies they sell
  • Direct relationship with the insurance company

Benefits of buying directly from an insurer

  • The premium may be lower on occasion
  • Feeling of control since you are responsible for researching and reviewing the different options

How Pacific Prime can help

Pacific Prime is a broker of choice for more than 3,000 corporate clients, with our team of expert advisors working towards the same goal of simplifying insurance. We ensure that all of our clients, whether corporate, individual or family, find the best insurance solution for their needs and budget. Our partnerships with all major insurers also help us when we need to negotiate premiums, benefits, and conditions. Contact us today for impartial insurance advice, a no-obligation, free price comparison and more.

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Jantra

Content Creator at Pacific Prime UK
Jantra Jacobs is a content writer at Pacific Prime. On a typical work day, she writes and edits articles, guides and anything else word-related. She aims to produce content that is easy for readers to understand and enjoyable at the same time.

When she’s not writing, she’s likely searching for a new restaurant or cafe to try, reading or doing yoga.
Jantra