What is the difference between an insurance agent and a broker?

An insurance agent and a broker are two distinct, legally defined roles in the insurance industry in Maryland. An insurance agent is an individual who is authorized to act on behalf of an insurance company to market, sell, and service insurance policies. Insurance agents can also give advice and assistance to customers in the selection of suitable insurance coverage. Agents can be independent, meaning they represent multiple insurers, or they may be exclusive, representing only one insurer. Insurance brokers are typically independent agents, representing the interests of policy owners rather than insurers. Insurance brokers provide advice and assistance to customers in their selection of insurance coverage. Additionally, they negotiate on behalf of the policyholder to obtain competitive rates and terms from insurance companies. Brokers also advise customers about the suitability of various policies available, assist with the claims process, and provide renewal and other services. The main difference between the two is that agents work for the insurance companies, whereas brokers are independent, working for the policyholders. Agents are compensated by the insurance companies via commissions, whereas brokers are typically compensated through fees paid by the policyholders. Both agents and brokers can help individuals and businesses find the right insurance coverage for their particular needs, but brokers are better positioned to represent policyholders in the event of a dispute or other insurance-related issue.

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