H|BC Explains the Difference Between an Insurance Consultant Versus An Agent


Consultant with couple

There’s a lot of confusion about what a broker or consultant is as compared to an agent, so we wanted to take a few minutes to expand on this.  

What is an agent?

First, let me get this out there and make it loud and clear. To be able to sell or recommend any insurance products, you do have to be a licensed insurance agent in the state(s) in which you are doing business. Normally someone will have a resident license in the state in which they live, but then you can have non-resident licenses in other states as well as where you are doing business and writing policies but are not domiciled, hence the non-resident license.

Any and all people in this industry (in payroll, HR, etc.), if they are recommending anything to you that is insurance-related, they should be licensed. If they are not, run. Without a license, they are not going to be educated not only on the policies they are attempting to recommend, but they are more than likely also unfamiliar with state and federal laws that apply to said policies. Getting licensed is step 1, everyone needs to be licensed in the state(s) in which they operate. For any legit company, getting all employees in any product recommending type of role should be the first priority.

So now let’s talk about some different types of agents.  

A captive agent will be someone who works for a single insurance provider and only sells/recommends that company’s products. Many very popular home and auto insurance companies have captive agents employed for them, and these people can only sell the products that their employer provides. They cannot recommend other options. These types of careers can be very lucrative. Still, an agent in this type of role will always have their success somewhat or, in some cases, completely tied to the competitiveness of the products and pricing of the company they work for. 

This works for some but not for everyone, especially consumers looking to an agent for help in looking at multiple options from multiple insurance providers. Another example of a captive agent would be a sales representative for a large insurer selling to brokers, who then sell to consumers or employers. These sales reps are licensed, but they are only selling/recommending their products to agents/agencies that then sell to the consumer. This is a different delivery model than previously mentioned and is more common in commercial and employer markets; however, many independent agencies also help consumers find home, auto, and renter’s insurance.

So with that said, let’s talk about an independent agent or agency. An independent agent is contracted or appointed with many different insurance companies and has the flexibility and freedom to offer different solutions to their clients based on the client’s needs. Most commercial and benefit-focused agencies operate in this manner. In this type of setup, the licensed agent has multiple offerings from multiple insurance providers that they can offer their clients. Instead of just having one solution, they have many. This hopefully can be a one-stop-shop for their clients and can change products and vendor offerings for their clients from time to time without having to completely lose their client’s business. This type of agency is often referred to as a broker, and many have even evolved above and beyond just insurance recommendations. They now help their clients with more than just insurance, such as compliance, administrative and payroll solutions. For example, some brokers, like ours, have even partnered with tech and compliance companies to be able to offer clients tailored solutions or proprietary service and product solutions. In the hierarchy of the agent world, we consider the below to be the level/complexity of each level of the agent.

Base level – Singe Insurance Company Offerings – Captive Agent – Typically employed by a large insurance provider. This is common for some home and auto providers who sell directly to the public and commercial sales reps who sell to brokers and consultants. 

There are also a lot of captive life insurance agents that sell directly to the public who can only sell their own proprietary products.

Mid-Level – Independent Agent – But Still Only Dealing with Insurance Products – This is common in the Property & Casualty World, many P&C agencies are truly independent, where they have numerous insurance company options for their providers. 

Many General Agencies (think a broker for brokers) also operate in this space. 

Consultant – Independent agent who also offers/advises on tech, HR, day-to-day administration, and compliance solutions. Most larger national and regional agencies play in this space, as well as companies who focus specifically on benefits (like H|BC!) or those who focus specifically on commercial P&C.  The consultants deal typically with employers, work to see what their goals and objectives are and seek to be the end all be all for their client in their particular space.

There is nothing wrong with any of the above levels or approaches to insurance products. They all fill an important role in the insurance and benefits-related markets, but it is helpful to know the different types of agents and how they interact with consumers.

We have and always will tell consumers who need help finding any type of insurance products, regardless of what they are, to find someone you are comfortable with who understands your needs and who you feel can best represent your interests in the marketplace. A quick throwback to that old adage, you work with who you know, like, and trust. 

Even in this day and age of technology and video meetings, that still holds true.  

In reading the above and now understanding the different approaches that people can take in the various roles throughout the insurance industry, I hope you can better seek out and find those who you feel can help you or your business the best.  And as always, never hesitate to contact us to chat or pick our brains about any topic!

Thanks for the read!

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