The terminology of any industry can often sound like “insider language” or jargon, with multiple phrases being regularly used, as if everyone understands what they mean. For example, titles for insurance professionals who work with clients can include Broker, Agent, Producer, Advisor, Solicitor, and even Consultant.  I ’ve been asked before about each of these terms and which type of professional is the best to work with.

Here’s the secret answer:  It doesn’t matter what they call themselves. Only two questions matter, which I answer at the bottom.

The challenge is that insurance titles mean different things in different states and, often, the distinction is more about how someone wants to brand themselves rather than any substantial or legal difference.

Let’s just discuss, at a high level, the basic models of buying insurance. In reality, there are only three:

• You purchase directly from an insurance carrier, bypassing a broker:

This is the “Geico” model. You call Geico and they sell their auto policy directly to you.

• You purchase from an agent of a carrier that has a local office:

This is the State Farm, Allstate, and Farmers model. You work with one of their local agents and they sell you a policy only from that carrier. This is often called the captive model.

• You purchase from an independent broker who works with multiple carriers:

This is the model of many local brokers that advertise insurance services in your area, who are not aligned with one specific carrier. They advertise their own name, not a carrier’s name.

Most any other model of insurance sales is related to one of the three above.

In many jurisdictions, insurance professionals in the second category call themselves agents because they are acting as an agent of one specific carrier. They essentially act as an extended employee of that carrier.

Similarly, most insurance professionals in the third category call themselves brokers because they broker insurance business across a wide variety of carriers.

Some individuals establish themselves to provide more consulting and advice on how to insure businesses, rather than just selling a policy, and will brand themselves as consultants or advisors. However, the key threshold questions to understand are:

• Will they sell you a policy?
• Can they independently shop from any carrier, or are they contracted and constrained with a specific carrier?

 

That’s all that really matters.

Don’t get caught up in the esoteric conversation about someone’s title. What matters is what your insurance partner can do behind the scenes and ensuring they are independent with your best interest in mind. You want a professional that is experienced in their field, can place/bind coverage, who is free to shop multiple carriers for you so they can put the right policy in place for your needs.