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What is the difference between an insurance broker and an insurance agent?
What is the difference between an insurance broker and an insurance agent?
Whilst an Insurance Broker and an Insurance Agent sound like very similar terms, in reality, they are vastly different and it is worth understanding the difference to ensure you understand what the underlying motivations are for people who are insurance brokers and who are insurance agents.
What are Insurance Brokers
An insurance broker is an expert in insurance and in mitigating risk. Insurance brokers operate on behalf of their clients and use their insurance expertise to provide insurance advice to their clients.
An insurance broker is independent of the insurance product that they are providing you advice on. Sometimes, insurance brokers can operate as an Insurance Agent and in these circumstances, you should be made aware of this and have it fully explained to you. An independent insurance broker enables an insurance broker to source insurance products from various insurers and underwriters that match your risk requirements.
Insurance brokers can be experts in a few key types of insurance, eg cyber insurance, workers compensation insurance or aviation insurance or generalists across all business insurance and general insurance.
Insurance brokers are well placed to provide you with specific advice regarding risk management. Insurance brokers can also be useful in helping you to decide what insurance you require and how you could manage and mitigate your business risks in other ways.
Insurance brokers in Austalia are licensed and required to operate under an Australian Financial Service License (AFSL). You can request an insurance brokers AFSL and check their license with ASIC.
Insurance brokers can also be very useful if you need to make a claim on your insurance policy. Insurance brokers have been through the claim process many times and understand the insurance claim process, speed and potential outcomes.
What are Insurance Agents
Insurance Agents operate on behalf of insurance companies. Insurance agents are not independent of the insurance company they are an agent of and operate under the Australian Financial Services Licenses (AFSL) of the insurance company that employees them.
Management Liability insurance is designed to provide protection to both the business and its directors or officers for claims of wrongful acts in the management of the business.
A business insurance pack can provide cover for your business premises and contents, against loss, damage, theft or financial loss from an insured interruption to the business.
Insurance Agents operate on behalf of insurance companies. Insurance agents are not independent of the insurance company they are an agent of and operate under the Australian Financial Services Licenses (AFSL) of the insurance company that employees them.
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Andy Jamieson
As such, Insurance Agents are not independent of the products they are offering and need to disclose that they are operating as an insurance agent. Insurance agents typically provide a breadth of insurance products, however, they are from the one company or from aligned insurance companies.
Insurance Agents can provide advice on the insurance products they are selling as part of ensuring that the customer understands the product offering and scope.
If you are confused, please ask your insurance broker to explain the situation to you.
General Advice Warning: This advice is general and does not take into account your objectives, financial situation or needs. You should consider whether the advice is appropriate for you and your personal circumstances. Before you make any decision about whether to acquire a certain product, you should obtain and read the relevant product disclosure statement.
All information above has been provided by the author.
All information above has been provided by the author.
Andy Jamieson, ABN 17 613 588 266
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Andy Jamieson
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