Independent Health Insurance Agents and Brokers
An independent health insurance broker (or independent health insurance agent) could be called an insurance counselor. A captive insurance agent works for one insurance company and is bound to sell only one company’s products. Independent health insurance agents and brokers, however, serve their clients with a health insurance quote from numerous different insurance companies, recommending (or is at least expected to be recommending) the products best suited to meet a customer’s needs.
Independent Health Insurance Agents and Brokers: What Is the Difference?An agent is an independent contractor in contract with an insurance company. An agent may be exclusive, contracted to only one insurance company, or non-exclusive, contracted to two or more insurance companies. An agent represents one or more insurance companies and specializes in knowing and selling their particular products. Since the repeal of the Insurance Brokers (Registration) Act of 1977, the term broker has taken on a broader meaning than previously allowed. This has created some flexibility – if not inconsistency – in the use of the word. An insurance broker, strictly speaking, represents a client, instead of an insurance company, and is not in contract with any insurance company. An insurance broker compares several different insurance companies’ products in order to best cover a client’s exposures, or potential losses. Once an insurance company is chosen, that company may enter into a contractual agreement directly with the client. Brokers may choose to specialize in one type of insurance or many. In the United States, both agents and brokers must hold current producer’s licenses in every state they wish to practice. The title independent health insurance agent is typically used to mean a health insurance broker. For the sake of clarity, this article will the typically use the term broker in reference to independent health insurance agents and brokers. The term agent will be used as defined above.
Independent Health Insurance Agents and Brokers: How Are They Paid?Independent health insurance agents and brokers can be paid salary or commission. They are, however, typically paid commission on each policy they issue. Commission is calculated into an insurance company’s rates, so neither agents nor brokers should charge fees for their services. If an insurance agent or insurance broker should attempt to charge such illegal fees, he or she should be reported to the appropriate state’s Department of Insurance. The size of a broker’s commission will vary from insurance company to insurance company; larger insurance companies will typically provide a larger commission on their products than smaller businesses will. A client may find it wise to ask a broker for his or her reasons in promoting a particular product so as to expose any ulterior motives that the broker may have, such as a higher commission. A broker’s first responsibilities are to a client, whom he or she is representing. In accordance with this principle, a client must authorize his broker’s commission in writing, even though the commission is automatically calculated into the premiums a client will pay whether or not a client avails himself or herself of a broker’s services.
Independent Health Insurance Agents and Brokers: How Can They Help?Independent health insurance agents and brokers specialize in simplifying the insurance world for his or her clients. As a profession in the health insurance field, a broker is able to accurately explain medical terminology and concisely summarize insurance contracts. A broker’s goal ought to be to use his or her expertise in health insurance companies and their products to find for a client the health insurance products that are best tailored to cover a client’s exposures. As clients’ servants, independent health insurance agents and brokers should spare clients the great time and possible frustration they would otherwise experience in learning the maze of insurance companies and their products. Many excellent brokers stand ready to serve. A free health insurance comparison quote is available upon request by entering one’s zip code at the top of this page. |
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