Difference Between Insurance Agent and Broker
In the world of insurance, the two most common terminologies are the insurance agent and the insurance Broker. While they sound similar, they adhere to several differences and serve distinct roles and responsibilities. That said, here is everything you need to know about these professionals, what differentiates them, the roles they serve, and the legalities they attract.
Insurance Agent vs. Insurance Broker: Are They Different?
Insurance Agent
As the name suggests, these professionals are more invested in selling diverse policies on behalf of one or more insurance companies. Since they are company-centric, their main goal is to elevate sales through direct selling and client interaction. They can suggest policies to insurance-seekers, finalize the deal, and earn commission on each policy sold.
Insurance Broker
The insurance broker works on a different trajectory altogether. They do not represent the insurer; instead, they curate different policies from diverse companies and refer them to a vast demographic based on their preferences and financial standing.
Policy Bazaar is the prime example of how an insurance broker works in general. They are client-centric and thus focus on policy recommendations. Besides, they can help fetch premiums, settle claims, and wrap up policies upon termination- all that for a commission.
While both serve distinct roles, IRDAI remains their governing body. Neither the agent nor the broker can sell policies without IRDAI’s approval and proper licensing, which brings us down to the legal requirements.
Insurance Agent vs. Insurance Broker: Which One Offers Better Growth Potential?
While the presence of both is pivotal for insurance companies, an insurance agent has a relatively narrow reach when it comes to accessing insurance seekers. The reason is simple — they work with a limited number of insurers and often lack the resources or digital presence needed for wider market access.
On the other hand, insurance brokers are more client-centric and have the resources and technology to reach a broader audience, resulting in higher sales and better customer engagement.
Insurance Agent vs. Insurance Broker: A Tabular Differences
| Factor | Insurance Agent | Insurance Broker |
| Loyalty | To insurer | To client |
| Product Range | Limited – restricted to one or a few insurers | Extensive – covers multiple insurers and products |
| Regulation | IRDAI (Insurance Agents) Guidelines | IRDAI (Insurance Brokers) Regulations, 2018 |
| Best For | Simple, brand-specific insurance needs | Complex, comparative insurance needs |
| Eligibility Criteria | Individual aged 18+, passed 10th/12th standard (depending on product category), completed IRDAI-approved training | Registered company, LLP, or cooperative society with qualified directors and trained staff; must fulfill net worth and capital requirements |
| Training Requirement | Must undergo 15–50 hours of IRDAI-certified training depending on product category | Designated personnel must complete 50–100 hours of IRDAI-approved broker training |
| License Authority | IRDAI issues a license through the associated insurer | IRDAI directly issues the Insurance Broker License |
| License Validity | 3 years (renewable) | 3 years (renewable) |
| Documents Required | – ID proof (Aadhaar, PAN)- Educational certificates- Passport-size photos- Training completion certificate | – Incorporation certificate- Net worth certificate from a CA- Director KYC- Business plan- Professional indemnity insurance policy |
| Application Process | Apply via insurer or online IRDAI agent portal → Upload documents → Attend training → Pass exam → Get license | Submit Form B to IRDAI → Pay application fee → Submit required documents → Inspection & evaluation → Receive IRDAI broker license |
| License Fee | ₹250 (Individual Agent License) | ₹25,000 (Direct Broker)₹50,000 (Reinsurance Broker)₹75,000 (Composite Broker) |
| Capital Requirement | Not applicable | ₹50 lakhs (Direct Broker)₹2 crores (Reinsurance Broker)₹5 crores (Composite Broker) |
| Commission Structure | Commission based on policy type and insurer guidelines | Commission and brokerage fees as per IRDAI-approved limits |
| Legal Liability | Limited; insurer bears most compliance responsibility | High; must maintain professional indemnity insurance and adhere to strict IRDAI compliance |
| Renewal Requirement | Renewal application before expiry, with proof of continuing education | Renewal through IRDAI with updated financials, compliance reports, and renewal fees |
There is no doubt that the insurance agent and insurance broker contribute significantly to the insurance sector’s growth. While both are promising, the insurance broker seems to have an upper hand when it comes to growth. However, that does not make the insurance agents futile. The direct access to customers and ease of negotiation ensure they never get out of demand. Let us know if you are interested in leaping into these promising regimes. Adviso’s experts ensure you navigate legalities like a professional.
Also Read: How to Get Insurance Broker License Online
FAQs: Insurance Agent vs. Insurance Broker
Q1. What is the main difference between an insurance agent and an insurance broker?
An insurance agent represents one or more insurance companies and sells their policies directly to customers. In contrast, an insurance broker acts independently and offers policies from multiple insurers to help clients choose the best fit.
Q2. Who regulates insurance agents and brokers in India?
Both insurance agents and brokers are regulated by the Insurance Regulatory and Development Authority of India (IRDAI). They must be licensed and comply with IRDAI’s specific guidelines and code of conduct.
Q3. Can an insurance agent sell policies from multiple companies?
Yes, but with limitations. A corporate agent can represent a maximum of three life, three general, and three health insurers, while an individual agent is typically tied to one insurer in each category.
Q4. What legal license is required to become an insurance broker in India?
To operate as a broker, one must obtain an Insurance Broker License from IRDAI under the IRDAI (Insurance Brokers) Regulations, 2018. The license is valid for three years and must be renewed before expiry.
Q5. Are there different types of insurance brokers?
Yes. IRDAI classifies brokers into three categories:
- Direct Brokers (handle retail and commercial policies)
- Reinsurance Brokers (specialize in reinsurance contracts)
- Composite Brokers (handle both direct and reinsurance business)
Q6. What legal qualifications are needed to become an insurance agent?
An insurance agent must undergo IRDAI-approved training, pass the IRDAI exam, and obtain an agent license through an insurer. The license must be renewed periodically.
Q7. How does commission differ between agents and brokers?
Agents earn commissions directly from the insurer for selling policies. Brokers also earn commissions, but their rate is often higher since they handle policy comparisons, claims, and after-sales services on behalf of clients.
Q8. Is there a conflict of interest between agents and brokers?
Yes. Agents are loyal to the insurer, promoting specific policies, while brokers work for the client, recommending the best available policy across multiple insurers — minimizing bias.
Q9. Can insurance brokers assist with claims settlement?
Absolutely. One of the major advantages of working with brokers is their ability to assist clients in filing, tracking, and negotiating insurance claims on their behalf.
Q10. Are insurance brokers legally liable for client losses?
Yes. Under IRDAI regulations, brokers must maintain professional indemnity insurance to cover liabilities arising from negligence, misrepresentation, or errors during policy recommendations.
Q11. How does IRDAI ensure compliance among insurance brokers and agents?
IRDAI conducts regular audits, inspections, and license renewals. Any violation, such as mis-selling or providing false information, can result in license suspension, monetary penalties, or permanent cancellation.
Q12. Can individuals apply directly to IRDAI to become brokers?
No. Only registered companies, LLPs, or cooperative societies can apply for an insurance broker license. Individuals can, however, apply to become insurance agents.
Q13. What are the advantages of hiring an insurance broker over an agent?
Brokers offer unbiased policy comparisons, personalized advice, claim assistance, and multi-company access, giving clients greater flexibility and transparency than agents.
Q14. Is online insurance broking legal in India?
Yes. Digital platforms like Policybazaar operate legally as IRDAI-registered insurance brokers, offering licensed online insurance brokerage services to customers.
Q15. Which career has better growth potential: insurance agent or broker?
While both offer good opportunities, brokers generally enjoy higher earning potential, wider client networks, and long-term scalability due to their independence and digital market access.
