Defining Producer, Agent, and Broker
March 4, 2019
Most people use producer, agent, and broker interchangeably when they talk about insurance. However, there are significant differences, and understanding the terms can help you determine which is best for your insurance needs.
Producer is a general term used for people who sell insurance. Producers are either agents or brokers.
Insurance Agents work for and represent just one insurance company. Many direct writers, such as Allstate, Farmers, and State Farm, employ insurance agents. The agents only provide the coverages offered by their company. Insurance agents are often called “captive agents” because they are captive to one company.
Insurance Brokers work for the insured and represent multiple insurance companies. Brokers can provide a broader range of coverages because they have access to more markets than an agent. Brokers are often referred to as independent brokers because they are not dependent on any one insurer. Just to keep things confusing, brokers are often called “independent agents” in advertising.
Both agents and brokers are professionals. Each must pass a rigorous test in order to be licensed and, in nearly every state, must provide proof of continuing education in order to renew licenses. Additionally, agents and brokers may earn professional designations through intensive educational programs. Some designations require years of study and exams, and represent the highest levels of knowledge and achievement in the insurance industry.
Parker, Smith & Feek is an insurance broker. We believe that there are significant advantages to working with a broker, especially for high net-worth clients with complex insurance needs.
Insurance Broker | Insurance Agent |
| We represent our client, whose needs are our highest priority. | Agents represent the insurer; their priority is to sell and service coverage on behalf of the insurer. |
| We craft coverage to each client’s specific needs and concerns. We are familiar with unique insurance situations and partner with multiple insurers to obtain appropriate coverages. | Agents only offer coverages provided by their insurer. An agent representing one insurer may be an appropriate choice for clients with basic insurance needs. |
| Our insurers’ products are designed for high-net worth clients. They include coverage enhancements and value-added services that address the affluent market. | The insurer’s product is designed for the “Main Street” market and the insurer has less appetite for complex or unusual exposures. They offer few coverage enhancements or value-added services. |
| We provide claims support. Our Claims Advocates work with the insurer’s claims adjuster on behalf of our client. | Insureds work directly with the insurer’s claims adjuster. |
Both agent and broker incomes are primarily based on commission, a percentage of policy premiums. Parker, Smith & Feek’s compensation plan is unique within the industry. While our firm’s income is based on commission, all of our employees are salaried. This promotes teamwork, eliminates competition for commissions, and enables us to always fulfill our primary purpose as brokers—to make the client’s needs our highest priority.
We have served our clients as an independent broker for over 80 years and firmly believe it is the most effective means of providing appropriate coverage and superior client service. Parker, Smith & Feek is one of the top 100 brokers in the country and has received a number of regional and national recognitions within the industry.
The views and opinions expressed within are those of the author(s) and do not necessarily reflect the official policy or position of Parker, Smith & Feek. While every effort has been taken in compiling this information to ensure that its contents are totally accurate, neither the publisher nor the author can accept liability for any inaccuracies or changed circumstances of any information herein or for the consequences of any reliance placed upon it.
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