This is a guest post by Andre Pinantoan, who is part of the team that manages Australian Credit Cards, a credit card comparison website with an extensive personal finance blog, based in Sydney Australia.
Insurance Brokers are the intermediaries between clients and insurance companies. Their goal is to get you the best possible price for insurance, communicating with many different insurance companies, clients and even other brokers, in an effort to shop for the best rates.
They work independently, have much more flexibility than the tied-in agent of one insurance company, and, because they work with so many different insurance companies, can insure your car, house and other valuables by finding the best insurance policy at the best price in the market to suit your needs. They do not charge a fee to their clients, but receive commissions on the insurance policies they sell.
These independent brokers’ best skills are people skills. Unlike insurance agents, who work for their company and have their company’s best interests in mind, insurance brokers work with people who require insurance, and generally have an office in which to serve the public’s needs.
The requirements to become an insurance broker depend on the state in which you wish to work. Depending on the area, at least a two-year Associates Degree is strongly recommended, and some states may also require the prospect start out as an insurance agent to obtain the necessary experience. Many agencies require 3 to 5 years of experience in the insurance field before hiring or licensing a broker.
Most insurance brokerages that are searching for new hires require workers to have a bachelor’s degree in business administration, economics or finance. Some colleges offer specialized insurance degree programs, though these are not common.
Licensing is a requirement, and all brokers and agents must be licensed in the state of their employment. Most states offer state-approved insurance training courses as well, with a timed exam at the end of the course. The National Alliance for Insurance Education and Research (NAIER) offers certification for insurance brokers, for example, which requires courses, passing an exam, participating in insurance workshops and continuing education to remain certified.
Furthermore, insurance brokers are required to be bonded. These bonds are called surety bonds, and vary in price and requirements. Specifically, insurance broker bonds are a type of license and permit bond that protects individual clients who purchase insurance through an insurance broker. The specific bond amount is determined state by state.
The purpose of this bond is to offer a guarantee that contracts and other business dealings will be completed as stated. They are meant to protect consumers, industry members and government entities from fraud or illegal performance. Surety bonds help the person or company who has experienced a fraud transaction, or have been harmed by illegal practices, to recoup their losses by the amount of the bond.
When you purchase a bond, you are saying to the client that you intend to be an ethical insurance broker, and if something goes wrong, your acts are guaranteed.
