What Is An Agent: The Best New Guide to Teach You
TLTR: This article answers the question ‘what is an agent’, explains the duties, responsibilities that comes with the job. Furthermore, it also lists down the steps you can take to becoming an insurance agent and the outlook of the position in the insurance industry.
Every type of job begins somewhere. And each job is a door that leads to a larger organization or an industry. And within each industry there are different positions and roles made to help run it. Similarly, the insurance industry consists of skilled professionals filling roles such as agents, brokers, producers, and underwriters, to name a few. Let’s look at one of these roles. And, that role is of an insurance agent. While to the everyday person the details of what an insurance agent does, isn’t necessary; it might be important to you. Especially if you’re looking for a career in insurance.
In this blog
What is An Agent?
An insurance agent is someone who sells and promotes insurance products and services to clients who need them. Often times, customers aren’t aware of what type of policy they need. An agent is there to assist clients get the right coverage to fulfill their insurance needs.
Insurance agents may also specialize in selling only specific types of insurance policies like life insurance or health insurance, depending on the training and expertise they get from working in the industry. Other than that, some agents cater to both commercial and P&C insurance such as car insurance and homeowners insurance. They are also responsible for building up their customer network and networking contacts. They can do this by learning from veteran agents and through hands-on experience from the job.
In the process of selling insurance and helping their clients, agents also represent the insurance company they are associated with. When they approach clients or businesses, their way of communication, conduct, and response to the client will reflect the insurance company they are working for. The way agents present themselves to clients is a representation of how an insurance company treats its customers.
In short, agents are insurance professionals that specialize in selling policies from the company they represent.
What Does an Insurance Agent Do?
Besides selling insurance to different individuals and businesses, insurance agents have additional responsibilities as well. Here are some additional duties of an agent:
- Reaching out to new clients and businesses
- Processing insurance applications and claims
- Calculating premiums
- Learning about client payment methods
- Risk assessment
- Maintaining company database and bookkeeping systems
- Overseeing insurance claims
- Assisting clients with settlement claims
- Creating custom policies as per client’s needs
To put it simply, insurance agents are the bridge between insureds and insurers. They are the people to contact when a client’s needs to buy a new policy, file a claim, or are seeking a policy renewal.
Different Types of Agents
Insurance companies typically hire four types of agents to sell their products. They are independent agents, captive agents, exclusive or proprietary agents and managing general agents (MGAs).
Independent agents mostly work by themselves, and aren’t tied to any carrier. They are free to choose what insurance carrier policies they want to sell. That means they don’t have any restrictions in the policies they want to sell. But they can represent multiple insurance carriers at once. Additionally, they also have a commission fee for every sale. So, the more policies an independent agent can sell, the higher their commissions.
Captive agents work with one specific company and only represent them. This allows the insurer to create its own brand of agents that are loyal to them. Captive agents obtain a steady paycheck from the insurer and have limited autonomy. They are also restricted in terms of the products they can sell, the commission rates they get, and policies they can write.
Exclusive or proprietary agent is what it sounds like. This type of agent only represents one insurance company. They are bound to one insurer, so they have limited power in what policy they can sell. The main benefit of being an exclusive agent is that the insurance company will compensate them well for their loyalty and work.
Managing general agents (MGAs) are the ones who manage what products an insurance company sells. MGAs act as a representative of an insurer. Unlike other agents, MGAs have the authority to underwrite insurance policies. They also oversee what commissions agents get for their sales, what products they can sell, and what types of agents they want on their team. This is the most hands-on approach to selling insurance because it allows one person to control what happens within an insurance company.
How To Become an Agent?
If you’re looking to enter the insurance industry as an agent, most states require individuals to get a license. An insurance license can be attained by passing state regulated exams. These exams require you to have relevant knowledge about the insurance industry and will assess your capabilities.
Here are some important steps to becoming an insurance agent:
An entry level insurance job doesn’t require a bachelor’s degree or higher level of education. The insurance industry requires applicants to have at least a high school diploma or a GED equivalent. Whether you choose to go to college or not will depend what type of experience you have or what industry you want to work in.
However, if you wish to have a higher level of education then Associate’s degree in Business, Bachelor’s degree in Business, Insurance or Investments, and financial planning course can help you get a head start in the industry. Furthermore, with enough experience you could also aim for upper management level positions in the industry.
Settle For an Insurance Line
Every state requires beginner agents to pass a licensing exam for them to be certified. The pre-requirements tend to vary by state. You can find your state’s licensing requirements through the National Insurance Producer Registry (NIPR). Knowing what requirements you need to fulfill in order to get your license can be helpful as you are planning your career path.
Enroll In Insurance Courses
Insurance companies don’t expect you to know everything about insurance, but they will have certain expectations. Also, most licensing exams require you to complete certain insurance courses.
You can enroll in courses that help you understand the insurance industry and the responsibilities of an agent. Interested applicants can find these through course providers such as AB Training Center, Kaplan Financial, and WebCE to name a few. Depending on the hours you’re able to put into studying, the course can be completed in a few weeks.
Attend The Licensing Exam
Once you’ve completed the course work, it’s time to take your licensing exam. It’s best to register and set your exam date while you’re studying. Once you know your exam date, you’re able to work towards it.
After you’ve passed your license exam, you will need to send some documents to your state insurance board. Every state requires applicants to submit their official documents for an assessment to check for their previous work history. Along with these documents, a state exam certificate, biometrics, a citizen affidavit, and a background report also needs to be included.
Before an insurance agent is able to become a full-time professional, they usually need what is called “office experience” or any type of work that can help them get insight into what happens in the industry. You can get this experience by working in the insurance, financial or any related industry before you decide to become what type of agent you want to be.
Advance Your Career
Once you have the relevant educational qualification, professional knowledge and experience as per the state requirements, the next step is finding the insurance company that you want to work with. Then, once you’re ready, you can begin your career as an insurance agent!
How Does an Insurance Agent Earn?
Generally, an insurance agent salary is defined by commissions. It’s the most common form of compensation for agents. The commission amount depends on the type and quantity of insurance policies sold.
Besides commissions, agents can also be paid on a salary basis. How each of them get paid varies depending on which insurance company an agent works for. These methods of payment include:
- Salary only
- Salary and commission
- Commission only
- Salary plus bonus
Note: Bonuses are given to employees when an agency attains or exceeds a profit target.
What Is an Agent’s Salary Range?
As per the Bureau of Labor Statistics (BLS), an agent can earn more than $100,000 in their first year. The median annual wage for insurance sales agents was $52,180 as of May 2020. The lowest 10% of earners in the industry made less than $29,000, and the highest 10% earned more than $127,840.
Essential Skills for an Insurance Agent
A career in insurance can bring various opportunities to learn. But if you truly wish to excel in it its best if you have certain skills beforehand or cultivate them as you go. The skills are:
- Business management
- Product sales experience
- Strong Will
- Positive Attitude
These skills are something you cannot learn from books or courses. You have to get firsthand experience or learn from mentors or fellow colleagues. This is exactly why many beginner insurance agents start off by working alongside experienced colleagues. It’s a great way to learn about the industry and know more about your fellow insurance colleagues.
According to Deloitte, the global insurance industry is projected to grow by 3% in 2021. Additionally, 61% of insurers in North America are focusing on increasing diversity in leadership, development, and hiring. This fact proves that becoming an insurance agent is a viable career choice.
Insurance companies will always have the need for new customers and employees. As time passes, the older, experienced workforce pass the baton to a younger generation of insurance agents who will take the insurance industry ahead.
Insurance agents are one of the important jobs in the industry. They have the opportunity of selling policies, curating client relationships, and growing themselves. While the pre requisites to becoming an agent are fairly easy, nothing comes easy in life. With the right mindset anyone can excel as an agent and overcome challenges.
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Feel free to check out our other insurance blogs.
Frequently Asked Questions
How Long Does It Take to Become an Insurance Agent?
Once you’ve submitted your documentation, you can receive your license within 3-4 weeks. However, this time period can change depending on which state you live in. Therefore, it is best to check with your state insurance department for a precise time estimate.
How Can Agents Get Clients?
Insurance agents can get clients through the traditional way of conducting sales calls or through networking with fellow colleagues. Since time is an important factor, networking among peers is the best way to begin getting leads for insurance. Besides that, you can also opt for insurance directories.
Directories are a list of agents, brokers, and experienced insurance professionals where customers can go insurance shopping. You can become part of one and gain the necessary exposure to various clients that you could provide your services to.
Feel free to add a listing on our insurance directory today!
Are Insurance Agents Similar to Insurance Producers?
Yes. Both agents and producers have similar job responsibilities. The term “agent” is more commonly known among customers. Whereas, the term “producer” is more well known within the insurance industry.
How Do Insurance Agents Differ from Brokers?
Agents and brokers differ in the context of who they represent. Insurance agents primarily represent insurance companies. Whereas, insurance brokers represent the customers and take their needs into consideration.
Is A Career in Insurance Difficult?
Beginner insurance agents can expect a certain level of stress due to the new environment and responsibilities. However, as you gain experience and learn to manage your time, you can attain a work-life balance, making it less stressful.
Also, choosing a career in insurance or any field, means that you will need to have a certain mindset to make you see it through. While it’s okay, to quit if things aren’t progressing for you, always make sure that choosing this line of work is something you want.
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