US Insurance Broker, USA Insurance Brokers, Insurance Broker in the US

By: EconomyWatch   Date: 26 May 2010

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US insurance brokers are basically independent agents who can offer a wide array of insurance products. They are not the employees of a particular insurance company and can therefore sell policies of various insurance companies. In order to operate in the US, insurance brokers must have a broker’s license, unlike agents, which makes the former more sought after as a license symbolizes better qualifications and experience. US insurance brokers also have a greater responsibility towards their client than an agent, since they are also required to analyze the client’s needs before deciding upon a suitable coverage. Consequently, premium amounts are usually higher when a policy is bought through a broker.

What are the types of US Insurance Brokers?

Insurance brokers in the US can primarily be divided into the following three types:

  • Direct Brokers: offer policies sold by life as well as non-life insurance companies, such as vehicles, property and business insurance.
  • Reinsurance Brokers: deal in the reinsurance sector and also offer professional advice on risk management strategies, along with consulting services for clients.
  • Composite Brokers: have the authority to provide the services of both direct brokers and reinsurance brokers.

    • How are US Insurance Brokers regulated?

    Like most of the major industries in the US, insurance brokerage is also state regulated. Most states in the US issue brokerage licenses but they also have reciprocity agreements with other states, which allow US insurance brokers to operate in more than one state. However, there are some exceptions to this flexibility, such as the islands of Hawaii where brokers have to stay within the island to operate their business.

    What do clients look for in US Insurance Brokers before hiring them?

    The first thing that a client looks for is the reliability of the insurance broker. A good track record can only be built over time in the insurance business. The area of expertise of a broker also matters a lot for the clients. A client looking for a property insurance policy would not go to a broker specializing in vehicle insurance.

    Insurance companies have been observed to entertain large insurance brokers more than small brokers, since big brokers mean more business for the insurance companies.


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