California Insurance Brokers Vs Independent Agents

What type of producer are you?

  • Captive Agent

    Votes: 1 20.0%
  • Independent Agent

    Votes: 3 60.0%
  • Insurance Broker

    Votes: 1 20.0%

  • Total voters
    5

Storm Silva

New Member
7
Hello everyone, I am a little confused on how insurance brokers quote customers. According to CA's DOI Brokers are not allowed to act as brokers if they are appointed with an insurance company, meaning that if they do have an appointment with a company that they sell insurance through than they are actually working as an agent. I've done some research and I've done some research and figured out the main differences between independent agents and insurance brokers. Here is what I've found so far.

Independent Agents​
  • Represent the insurer
  • Have an appointment on file with the insurer
  • Has the power to bind coverage
  • Can not charge Brokers Fees
  • Receives commision from the insurer
  • Does not need to put up a surety bond with the State
Insurance Brokers​
  • Represents the insured
  • Does not have an appointment on file with the insurer
  • Does not have the power to bind coverage
  • Can Charge brokers Fees
  • Can receive commision from the insurer
  • Needs to put up a surety bond with the State
It seems to me that many independent agents call themselves Insurance Brokers when they are in fact not. I'm not 100% sure but to me it sounds like insurance Brokers are California version of an Insurance Consultant. Does anyone on here know the logistics of how Insurance Brokers work and can chime in?
 
Life and Health licenses are agent licenses. P&C can be either or both agents and broker.

I tell people I'm an independent agent since I sell L&H. I still have a P&C license as a broker and did write quite a bit of business through surplus lines brokers.

Rick
 
GreenSky is correct. If an independent insurance agent represents and sells for more than one company:

Life & Health = Independent Insurance Agent

Property & Casualty = Independent Insurance Broker

Broker usually means Property & Casualty aka Home, Auto, Commercial.
 
This is a terrific question.

On the One hand you are only scratching the service of the complexity involved here.

  • Many agents hold licenses in more than one state.
  • Many Insurers appoint "sub agents" through their Master Agency
  • Virtually all Agents are also Brokers at some point. Most Brokers are Agents with at least one carrier.
Hence in general I think its fair to say that I am Independent Broker/Agent and it depends on what insurer is chosen to purchase a policy from.

On the Other Hand, I think its possible to over thing things here. Consumers think of Brokers as Free Agents and some consumers think of Agents as just working with one company. The term "independent agent" in my opinion is not well understood by the public.
 

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