Although the terms “insurance agent” and “insurance broker” are sometimes used interchangeably, there is an important distinction between them. Persons with these job titles both work to facilitate the purchase of insurance policies by coordinating between (1) persons and entities who are interested in purchasing insurance policies and (2) insurance companies who are interested in selling insurance policies.

The primary difference between an insurance agent and an insurance broker is who they represent in a transaction—and thus where their loyalties lie. An agent represents one or more insurance companies and a broker represents the insurance buyer—whether an individual or a business.

An agent—sometimes referred to as a captive agent—generally provides information about insurance policies (sometimes called “product”) available from the insurance company or companies the agent represents. In contrast, an insurance broker “goes out into the market” and helps the consumer or business owner find, compare, and acquire the appropriate insurance coverage through one or more insurance policies.

An insurance broker’s compensation for helping a client find, compare, and acquire the appropriate insurance coverage is included in the premium payments made by the client (insured) who purchased the policy or policies. A broker should provide a client with a statement detailing the amount of the premium that will be paid to the broker in commission before the client completes the purchase.

In Arkansas, the distinction between an insurance agent and an insurance broker is recognized and regulated. Insurance agents are licensed professionals who represent one or more insurance companies and sell insurance products on their behalf. They are often referred to as 'captive agents' when they represent a single insurer. On the other hand, insurance brokers act on behalf of the insurance buyer, assisting individuals or businesses in finding, comparing, and acquiring insurance coverage from various insurers. Brokers are required to be licensed as well and must provide their clients with a statement detailing the commission they will earn from the insurance premium before the purchase is completed. Both agents and brokers must comply with Arkansas state statutes and regulations, which govern their licensing, conduct, and the manner in which they must disclose their compensation to clients. It's important for consumers to understand these roles when purchasing insurance to ensure they receive the appropriate guidance and representation in the transaction.