Insurance is a means of protection from financial loss. It is a form of risk management primarily used to hedge against a contingent, uncertain loss risk. The insured receives either a payment or goods in the event of a loss from their insurer, generally as part of an insurance contract. The insurance agency is the company that offers insurance policies to the insured; it is usually licensed to do so by a government body. The agency may offer its services directly to consumers through a retail network or work solely with business clients.
What is an Insurance Agent?
An insurance agent is a person who works for an insurance agency. He can be an independent contractor, or the agency can hire him to serve as a representative. During his employment, he will sell insurance policies directly to other individuals or through the agency’s sales channel in practice called “re-selling.” The agent is responsible for gathering and presenting evidence supporting the claim of loss to which he is assigned and handling protests filed by those receiving the insurance benefits.
Types of Insurance Agents
The two most common types of insurance agents are independent contractors and exclusive agents.
Independent Contractor
An independent insurance agent is a person who works for an insurance agency and makes his own decisions about how his business is spent. Independent agents must be licensed by the state where they hope to do business. The licenses vary by state, but independent insurance agents must generally be 23 years old and have a bachelor’s degree. They must also demonstrate good financial health and a clean background if applicants are under 35. Independent agents are usually paid by commission, but some can receive a salary and commission.
Exclusive Agent
An exclusive agent works for an insurance agency and must follow the rules and policies established by the company. An exclusive agent is paid by salary and commissions but must meet company-preferred educational requirements and demonstrate sound financial health. The agency can get a representative insurance license in other states.
Duties of an Insurance Agent
1: Selling Insurance Policies
The primary duty of the insurance agent is to sell insurance policies. The agent must be familiar with various insurance products, including auto, home, health, life, and rental property. He must also understand the needs of his customers and sell them a policy that will meet their requirements at an affordable price. An agent is also responsible for providing his customers with various services, including assistance in filing claims and changing coverage if necessary.
2: Transferring Policies
To be an effective salesperson, the agent must understand how a person’s premiums are spent. He must transfer these funds to pay claims and operating expenses, which include salaries and commissions. To ensure proper funding of an insurance policy, agents are responsible for periodically reviewing the policy and ensuring that it pays for the services requested by customers.
3: Providing Customer Service
The insurance agent is also responsible for providing excellent customer service. He must be available to answer questions and explain the details of a policy. He must also respond promptly to customers’ telephone calls and letters, keep records with more information on each transaction, and take good notes of conversations. The agent should maintain good client relationships by being friendly and courteous, explaining policies clearly, and offering discounts if appropriate.
4: Providing Insurance Products
The insurance agency needs to make sure that its agent presents all the insurance products it offers so that customers understand the benefits of each one. The agent needs to research different coverage on behalf of the agency and ensure that the coverage is affordable to customers. If a policy is inappropriate for a customer, the agent should advise them on how to reduce their risk and premiums.
5: Providing Legal and Financial Services
The insurance agent has the skills to help people with legal services and financial planning. The agents will explain the possible options available in a client’s situation and advise on rates and charges during various stages of an insurance policy. They will also help customers with taxes, including quarterly estimated tax payments.
6: Providing Training for New Insurance Agents
Insurance companies are responsible for training new agents to ensure they know the products and services offered by the company. The agent must have a thorough understanding of state insurance laws and regulations. If an insurance company does not employ a person, she can often find training programs for new agents online.
7: Serving as a Liaison between the Insurance Company and the Customer
The agent serves as a liaison between the insurance company and the customer. He must listen to their concerns, take notes of conversations and relay pertinent information to his employer. The agent helps his employer maintain positive customer relationships by working with them to find affordable premiums in exchange for taking on higher risks. He also ensures that customers are satisfied with their policies by explaining policy changes and helping them submit claims that meet company standards.
The tasks of an insurance agent are complex, and it may take multiple employees to help customers with all the details and coverage. New agents must be ready to learn the policies offered by their employers and adjust to the customers they serve. The agent must be willing to work with policyholders to maintain good relationships and provide them with knowledgeable service.
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