Oleksandr Rohovnin With about 300 million Americans having health insurance and thousands of insurance companies operating in the country, employing over 1.2 million insurance workers, it’s no wonder the term ‘insurance producer’ has long become a buzzword. The backbone of the insurance industry, insurance producers – or insurance agents, which is exactly the same – represent insurance companies to help clients choose the best insurance policy and streamline all the nuances that may occasionally pop up.
Whether you are looking for your first auto insurance, or you are willing to become an insurance agent, you will inevitably deal with the responsibilities and requirements of an insurance producer’s job, so it would be helpful to learn in advance what problems these people solve and what is needed to become an insurance agent yourself.
Without further ado, let’s dig deeper into the insights of the job of an insurance producer.
The Gist of the Job of an Insurance Producer
Contrary to popular opinion, the scope of the job of an insurance producer is not limited to selling insurance policies to clients. Acting on behalf of insurance companies – either a single one or a few ones, depending on the particular agent – they have a vast range of responsibilities, including but not limited to:
- Selecting the policy that best fits the demands of the client.
- Customizing the policy if needed and explaining the requirements of the policy.
- Settling insurance claims and solving disputes.
- Establishing payment methods and streamlining the payment process.
- Calculating insurance risks via in-person property examination and other methods.
Other Insurance Producers’ Responsibilities
Insurance producers are usually deeply involved in marketing, as this is in their interest to develop a broad network of clients through referrals, meetings, email campaigns, social media, cold calls, and whatever marketing tools they can effectively utilize. On top of that, insurance agents work on client retention so that their customers would prolong their insurance policies and spread the word about top-notch services of a particular insurer.
All in all, insurance agents – just like insurance brokers – are pretty much interested in serving the clients’ interests as this is always the most effective way to perform in the market. That said, an insurance agent is not the same as an insurance broker.
A Brief Visual Overview of the Insurance Sector
Insurance Agents vs. Insurance Brokers
While insurance brokers and insurance agents – which are the two terms for the same job – represent insurance companies, insurance brokers represent insurance buyers. Even though they perform many of the functions of insurance agents – for example, they examine the available policies to choose the best one according to the desires of the client – they cannot bind a client to a policy, which is an exclusive right of an insurance producer.
Besides binding, there are differences in training, licensing, accountability, knowledge, personalization, compensation, and scope of business. None of those, however, directly affects the experience of the customer, so it all boils down to agents representing insurance companies and brokers working more closely with clients.
How Much Do Insurance Brokers Make?
Salary-wise, insurance brokers make about 20% more than insurance producers (about $70,000 a year), but the actual numbers depend on the experience of the particular broker/agent and the company itself. The most paying insurance companies in the United States are USAA, AIG, MetLife, Liberty Mutual, and Allianz SE.
How Much Do Insurance Producers Make?
Becoming an insurance agent may be pretty lucrative. On average, insurance agents make about $50,000 a year, though the numbers vary drastically depending on
- Type of agent: in-house vs. independent. Agents working for companies don’t bother to generate leads, whereas independent agents have to find clients on their own. On the other hand, captive agents are limited to selling only one or a few policies as per the agreement with their company, whereas independent agents can sell as many types of insurance as they want.
- Type of commission model. Different types of insurance have different monetization models, so it’s up to the agent to choose the insurance that he or she can be successful with. For example, home insurance pays a percentage of the policy premium and every renewal, which encourages agents to develop their client network. In contrast, life insurance only pays much upon the purchase and the first renewal, whereas the third and all subsequent renewals usually bring no commission.
- Geographical factor. Different states have different standards of living, crime rates, level of public health, and myriads of other factors that affect the size of an insurance premium and therefore the commission of the agent. It goes without saying, though, that bigger states have higher demand and therefore allow insurance agents to earn more by selling more types of insurance.
- Knowledge and expertise. Formal education doesn’t mean much in the job of an insurance producer, but all agents without exception must obtain licenses in the states they work in. Most agents start by learning from more experienced colleagues before they can become independent producers.
Fifty thousand a year may not seem much provided you’re ambitious, but the good news is, insurance agents will likely earn more in the future as both the U.S. population and the demand for insurance services grow.
References
Oleksandr is an expert in deep research. He covers insurance topics across four major insurance verticals – auto, health, life, and home insurance – while taking into account the legal landscape of the state in question. Come rain or shine, you can expect regular quality blogs and timely updates from Oleksandr.
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