What's the Difference Between Insurance Brokers and Independent Agents

(We asked an expert a few questions, so you don’t have to. You’re welcome.)

Q: What’s an independent insurance agent?

Q: What’s an insurance broker?

Q: How are independent agents and brokers similar?

Q: How are independent agents and brokers different?

Q: Who regulates independent agents and insurance brokers?

Q: Can a broker write an insurance policy?

Q: What’s the difference between retail and wholesale insurance brokers?

Q: Why would someone choose a broker over an independent agent?

Q: Which costs more, an independent insurance agent, or a broker?

Q: How can I find a broker or independent agent in my area?

What’s an independent insurance agent?

They’re really a lot like a personal shopper. You tell them what you want and they find the best set of insurance options for you. Independent basically just means they’re not tied down to one carrier, like a captive agent.

Independent agents have contracts with multiple insurance providers and can use the relationships they’ve built with them to help their customers, whether they're individuals or corporations, find the right set of coverages and price for their needs.


What’s an insurance broker?

Kinda like a stock broker and stocks, an insurance broker sells — and sometimes negotiates — all sorts of different types of insurance products for individuals and corporations. Many stay focused in niche areas like large farming or corporate commercial operations, but there are brokers out there who deal with all types of different insurance needs.

Because a broker represents the individual or corporation who’s looking for insurance, they aren’t tied down to any one carrier. This gives them flexibility in the insurance world and allows them to survey the market, get quotes, and share them with their buyer. In the end, the buyer gets what they want.


How are independent agents and brokers similar?

In a lot of ways, really. In fact, most of the time brokers are referred to as independent agents, and vice versa. Some states don’t even offer broker's licenses, just independent agent's licenses. And if you live in one of those states and are looking for a broker, you’ll basically be dealing with an independent insurance agent.

And really, regardless of their title, they’re both in it to care for customers and find the right solutions for their needs. And the beauty of both brokers and independent insurance agents is that they get the freedom to shop multiple companies.


How are independent agents and brokers different?

The biggest difference is that independent agents can initiate insurance contracts, or secure coverage, on behalf of the insurance companies, and the  companies must honor those contracts. Insurance brokers have to submit applications to insurance companies on behalf of their clients, and don’t have the authority to enforce, or write, coverage. It's a longer process.


Who regulates independent agents and insurance brokers?

When it comes to regulating insurance practices and all, the responsibility comes down to the individual states. Each state has its own set of insurance regulations that brokers and agents must follow. That’s why you see some states where brokers are a thing and some where they're not.


Can a broker write an insurance policy?

Nope. That’s because they work for the customer, not the carrier. An independent insurance agent, however, can because they work on behalf of the carriers they have contracts with. A broker can only submit an application to the carrier on behalf of their client.


What’s the difference between retail and wholesale insurance brokers?

No two insurance brokers are alike, but more specifically, you can divide them into two types: retail and wholesale brokers. Retail brokers interact directly with businesses or individual clients. Sometimes, however, certain coverage types aren’t available to retail specialists. That doesn’t mean you’re just out of luck, your broker can actually work with one of their wholesale counterparts for access to additional markets and products you may need.

Wholesale agents typically have more expertise and access to markets that retail brokers don’t. They work directly with retail brokers and insurance companies to create policies for unusual or hard-to-place risks, while retail brokers typically retain contact with customers.

Why would someone choose a broker over an independent agent?

When it comes down to it, your personal preferences and needs will help you decide whether you need to use an agent or broker to get the insurance you need. Typically speaking, brokers are more often used by large corporations, or by individuals with unique circumstances that may make finding the right coverage difficult.

But overall, they both: 

  • Do all the research for you, finding insurance companies and policies that fit your needs and budget.
  • Provide access to policies from numerous insurance companies, with multiple options and price points. 
  • Are licensed and educated professionals who provide the advice you need to make the best choice. 
  • Can most likely provide for all of your insurance needs—from home and car insurance, to life insurance, health insurance, and more.


Which costs more, an independent insurance agent, or a broker?

In a perfect world, they would be the same. But technically, one could tack on additional administrative fees and such, making it more expensive than the other. However, agent or broker, they are both required by law to disclose ALL of this to you before your purchase.

Insurance agents might be able to provide less expensive policies, but not always. Brokers can research the market to find a variety of options at different price points from which you can choose.


How can I find a broker or independent agent in my area?

This process is not to be taken lightly. After all, you don’t want to put the protection of your family or business in just anyone’s hands. We recommend that you:

  • Listen to recommendations from friends and family.
  • Check out online reviews and testimonials (Yelp, LinkedIn, and other social media).
  • Reach out to your state’s insurance department.
  • Skim through insurance or business publications. 
  • Go through us. Trusted Choice® is here to help you find whatever you need. Heck, you can start right now if you want, right here.
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