For individuals, maybe that’s true? But I’ve been responsible for the overall health of 501c3 non-profit organizations over the past few years, and while I’m not (I hope) too stupid, I’d be really terrified to handle all insurance considerations without help from a professional agent.
Among the things we (“we” being people in a nonprofit) need to worry about are:
co-insuring government agencies that give us grants, as legally required
accident insurance because somebody falls and breaks a leg on our property, which may not be perfectly maintained because, y’now, we are a struggling nonprofit and guess what, we can’t afford the latest greatest in property repairs, so maybe our steps are imperfect/damaged by termites
protection against “predators” - as in, what if an art teacher we hire (even after doing a sex-offender/police report kind of check, as we do to stay compliant with our own internally created child protection policy) gropes a child?
board of directors insurance, because who would serve on a board if they couldn’t be sure that they would not be personally liable for millions of dollars if, for example, a kid was harmed?
There is a lot more but you get the idea. Honestly, I’d hate to be part of any non-profit that didn’t work with a knowledgeable insurance agent.
Can we make a distinction between an insurance agent, and an insurance broker? Because so far, I’m a little confused. I’ve written books for the Insurance Institute of Canada, so to me, those two terms mean two entirely different things.
To me, an insurance agent represents a direct writer, or in other words, one person who represents, and sells insurance for, one company only. Examples would include State Farm, Allstate, or TD Insurance. The agent works for the company, and is paid by the company. They only ever deal with that company, so while they can inform you of different product offerings from that company, they cannot and will not tell you about other companies’ offerings.
On the other hand, an insurance broker is an independent company, who shops your needs around to various broker market insurers, and offers a selection of policies from different companies. They may end up saying something like, “Well, Company ABC can suit your needs for $X, but Company EFG can do the same. It’s a little more expensive at $Y, but they throw in coverage for risk LMNOP, which ABC would charge more for anyway. It’s up to you.” They don’t generally shop the direct writers (State Farm, Allstate), but they do shop the broker market insurers, such as Intact and Chubb. Brokers are paid a commission by such companies, on the initial sale of a policy, and on renewals.
Understand my confusion about the use of agent in this thread? Can we settle on a definition?
Thank you - the clarifications between “broker” and “agent” are clearly really important and I confess I was ignorant about that. I wasn’t aware that anyone would rely on an “agent” (someone who only represented and advocated for one company) versus a “broker” (someone who helps people/companies/nonprofits negotiate among the offerings of various insurance companies).
As far as I know, “brokers” are very helpful. I can’t imagine relying on an “agent” if said agent only wanted to sell insurance from one company. The professional I know and refer to as an “agent” is actually a “broker,” apparently.
My State Farm agent handles/helps with the State Farm Insurance I bought. While they are friendly, they would look at me strange if I asked them to help me handle a non-State Farm claim.
Having said all this, agents, brokers, and all the rest who sell are in the customer service business. Maybe they are just being nice.
I have a State Farm agent. He’s the guy that took over the customers from my dad’s State Farm agent when that guy retired 20 years ago. I just spoke with my agent on the phone a few weeks ago. He does semi-annual calls with his clients.
In the US, what you are calling insurance “brokers”, people who deal with consumer insurance, are known as independent agents. Insurance agents who represent a single insurance company are known as captive agents.
Larger commercial insurance, where the insured actually negotiates their coverage instead of buying an off-the-rack policy, is generally negotiated by people called brokers.
For any one company, your price will not generally be affected by whether you buy through an agent or not. But some companies only sell through independent agents. Others only sell directly (possibly including the option of a captive agent) and yet others sell different policies through independent agents and through their direct marketing. So what policies you have access to will be affected by how you buy.
I buy insurance from a company that only sells directly. So I call their 800 number or use their app. They have an annoying phone tree, but once you get directed to a human, someone will answer the phone quickly. And I’ve had good experiences with them.
I was referring strictly to consumer insurance, although I didn’t say that specifically. My bad.
Like you, I’ve been associated with non-profits. The condo association I used to run had 12 distinct insurance polices written by ~9 distinct insurance companies. That each were shopped annually via our insurance broker / independent agent. Most years most policies renewed with the same companies, but most years some policy moved from insurer A to insurer B.
We also got solicited every year by dozens of competing brokers each promising ever better service and ever lower prices than all the other guys. Due to a quirk in FL insurance law, switching brokers was a distinct danger to the insured, but a bonanza for the new broker. Hence the vast number of them perpetually chasing each other’s book of business.
My general experience with our association’s broker was OK, but the whole system did nothing to suggest I would want to import a similar broker / agent experience into my own personal insurance needs.
You may not have dealt with an insurance agent - but that doesn’t mean you don’t have one. The last time I needed to find a new car insurance company, I went to a website ( don’t remember which one) that got me rates from different companies. Turned out it was Experian Insurance and they are now my “agent” - although I’ve dealt witht the actual insurance company directly since that first time.
From what I understand, the way insurance agents get paid is similar to the way at least some travel agents get paid - you pay the same for the cruise, resort,or insurance policy no matter how you buy it. If there’s an agent involved, the cruise line, resort or insurance agent gets a commision. If you buy direct, the company keeps the commision.
Clearly not, considering the individuals who’ve posted otherwise in this thread.
Brokers by your terminology are called agents here. I can see how the distinction is useful; but even the insurance company, when I get paperwork from them directly, refers to “your agent”.
Ah. Thanks for terminology; I hadn’t known that. I’m dealing with an independent agent.
I have had an insurance agent in the past, but not for many years. I buy from a direct writer, and every time I call I speak with a different person. They have all been competent and helpful. (One was extremely helpful, and saved us from getting scammed by a dishonest auto dealer. She called me to tell me that the VIN the dealer wanted her to insure wasn’t the same as the VIN my husband had faxed to her.) They are probably legally insurance agents, but they aren’t “my agent”, they are just the employee who is next on the queue when I call.
Quite right. I was incorrect in my terminology. I deal with a broker office. They’re not tied to any particular insurance company and offer different options with different carriers. It’s my understanding they owe a fiduciary duty to me to treat my as their client, not the insurance companies.
I use an independent agent for my home and auto. He’s been good about getting me competitive rates and preemptively seeking new options if one company is jacking up premiums. When my son started seeking auto insurance, he started out online but then came to ask me who our agent was after dealing with every company wanting to give him a direct hard sell.
I’m in the same boat (but it’s only been 35-40 years for me). I’ve always used USAA for most of my insurance needs, including car insurance, renter’s insurance, homeowner’s insurance, and personal property insurance.
I’ve never had an insurance agent for them, nor do I know how that would work for USAA. They cater to military members (active duty and veterans), and for the former (active duty servicemembers)—who typically get transferred to a new area every 2-3 years—it would be difficult to establish a relationship with an agent.
I had them when I was on active duty, and continued using them after I separated from the military. And my parents and maternal grandparents (all military as well) did the same. I’ve actually been covered by USAA for car insurance since I first got a driver’s license.
I have had claims, of course. In such a case, I call their 800 number or go on their website. They just paid a minor auto collision claim for me a few weeks ago (which was my first claim in about 10 years or so).
They also sell life insurance, but I kept procrastinating on getting it. So I actually did get a term life insurance policy from Prudential through an agent who was a family friend. The friend encouraged me to get life insurance when I needed it (i.e. when my son was young and dependent on me), so that was helpful.
We can try, but we will not be successful. (I’ve worked in the insurance business for 20+ years.)
Right, and this is part of the problem: the terms are used differently between US and Canada, and even within the US, they are not used consistently. For every person who tells you there is a strict definition, there will be another who is strict about a different definition, and another dozen who use them inconsistently. It’s a fool’s errand.
The distinction between an independent agent and a captive is important: independents can sell policies from multiple carriers, captives from a single one. Any distinction between agents, brokers, retailers, wholesalers, etc. is not important for personal insurance in the U.S.
I won’t say you’re screwing up, but you’re missing an opportunity.
Most importantly: you pay the same no matter what channel you get your insurance through. Premiums are fixed, and it’s just a matter of who gets what commission, and even if you deal only with a website, there is still an agent behind the scenes. (We’ll ignore non-admitted policies, since that probably doesn’t apply to you and is an unnecessary complication).
The biggest thing I think you’re missing by not working with a live agent is advice about what insurance you need. I see people constantly making mistakes about what their limits should be, how big should their deductible be, what endorsements make sense for them, how much umbrella coverage they need, what discounts are available. However much you think you know about this, trust me - a good agent who does this as their full-time job knows more.
The advantage of an independent agent (versus a captive) is that they can help identify the best carrier for your coverage needs. My agent switched our carrier when our first kid started driving, because our changed circumstance was better covered by a different company. Any agent with experience knows in general which carriers will be the right fit, and they can run comparative quotes across several at once. A captive agent has a single option for you, so it’s all on you to ensure that carrier is the best for your situation.
The other advantages of live agents that have been mentioned – someone to help with claims, more personal service – are also nice perks.
99% of the time, I would much rather deal with a website than have to talk to a person, so I get the appeal of doing it yourself. But insurance is one of the few things that I will talk to an expert every time. As I said above, I’ve worked in the business for a long time, and I know more about limits, deductibles, and endorsements than 99.9% of the population. And that knowledge has only convinced me that I benefit with an agent.
I knew my agent because I liked to pay in cash. In the strange mythical age before the internet I went shopping for insurance several times and met several insurance agents. I’m not sure why I went last time (2013). Tradition I guess.
Fwiw, i am a p&c actuary, I’ve also worked in the industry for many years, and i have chosen not to use an agent for many years.
That’s partly because the carrier I’m with (USAA) doesn’t work with independent agents, they only write direct. And I’ve been very happy with them. (And when i worked in the claims department of a direct competitor, i looked at “customer satisfaction” scores for us and all our major competitors, and USAA was always at the top).
But it’s also because you actually do pay for the agent. Companies that work with independent agents pay them commissions, and that gets priced into the policy cost.
If you are buying a policy that you can buy via an independent agent, you may as well do so, as it will cost the same however you buy it. But the policies available are different depending on which “channel” you use.