Difference Between a Broker and an Agent

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What is a General Insurance Agent?

Insurance Agents are employed by individual insurance companies or are independent representatives of specific insurance companies to sell that company’s products to clients.

What is a Registered Insurance Broker?

A registered insurance broker is an independent insurance professional in Ontario governed by the Registered Insurance Brokers Act. Brokers sell general insurance including coverage of your home, business, automobile, boat etc. They offer product choice from a variety of companies (minimum 3) and offer independent advice.
Brokers represent their client’s best interest when negotiating a contract between the client and the insurance companies.

  1. Every Registered Insurance Broker must be properly licensed.
  2. Every Registered Insurance Broker is subject to a code of conduct.
  3. Every Registered Insurance Broker must meet certain qualification standards and continuing education requirements, established by the Qualification & Registration Committee.
  4. Every Registered Insurance Broker must be bonded and covered under an Errors & Omissions policy.

Are General Insurance Agents regulated the same way Insurance Brokers are?

No… In Ontario, the profession of Insurance Agent is regulated by the Financial Services Commission of Ontario (FSCO). FSCO issues the agents licenses and regulates the carriers and their employers. In contrast, Brokers are subject to a code of conduct and Provincial Regulation which is enforced by RIBO, as selfregulating body which is commissioned by FSCO to enforce the RIB Act onto Brokers.

Why is this important to me as a client?

It’s important to understand that Brokers represent you, the insured where in contrast to an Agent who works/represents a singular Insurance Company. You are a sales objective to an Agent but a client to a Broker. If your insurance premiums increases from one year to the next an Agent will have to try cutting coverage or have you accept the increase… a Broker will go out to market to ensure you get the best product at the most competitive price.

The most important differences come in three points:

  1. Brokers MUST continue to learn the Industry and products or they can lose their license
  2. Brokers form part of the claims process where Agents do not, they simply pass you on to their company’s claims service department
  3. Brokers represent you the client, Agents work for their company!

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