Insurance brokers have an important and very responsible function, helping clients to obtain various types of insurance coverage. The definition of an insurance broker is technically different from an insurance agent, in that brokers work on behalf of the client, rather than the insurance company. However, today these lines are somewhat blurred and insurance agents are sometimes called brokers, particularly if they have access to multiple carriers.
An insurance broker (or agent) must obtain a license from the state in which they intend to sell insurance before they are permitted to engage in business. They must take examinations which are administered by the state under the auspices of the state insurance commissioner. These are standardized tests including insurance concepts, state laws and ethics questions. Study courses are usually required in preparation for the licensing exam, and a student can expect to spend several hundred dollars preparing for and taking the exam.
It is helpful for an aspiring agent to have a college degree, but it is not essential. Agents and brokers must take continuing education to maintain their license; these courses keep the professionals up to date on changing insurance law, new products and more intense study into insurance matters. Working as an insurance broker dictates that the individual be vigilant and professional in all dealings with clients. The brokers hold professional liability coverage on themselves in the event that a loss occurs as a result of their negligence or omission.
A broker may work with clients to obtain auto, home, business, health, life, and other types of insurance. In some ways, being a general insurance broker can be a scalable career because as you can grow your client base. With a large clientèle, you can branch off on your own and start your own business. The more clients you have, the more money you can make.
Duties of General Insurance Brokers
They discuss property and liability coverage, deductibles, policy limits and premium costs with purchasers, explaining the benefits and parameters of the insurance that is being considered. Some general insurance broking jobs may also be licensed as financial consultants, which require additional study and testing. These brokers may offer products such as life insurance which involves making investments in stock and mutual funds. Thus, they must be knowledgeable about laws that pertain to the regulation of investments. They have a high degree of responsibility to prudently take care of their client’s financial interests.
An insurance agent, or broker, usually works on a commission basis, and jobs in this field are plentiful. A broker with their own agency will also own their “book of business” which they can sell when retiring or changing fields. Renewal income helps to make this a lucrative type of sales job.