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 Montana, insurance agents and brokers are both involved in the process of helping clients obtain insurance, but they have different roles and represent different parties. An insurance agent represents one or more insurance companies and is responsible for selling the insurance products of those companies to clients. They are often referred to as captive agents if they represent a single insurer. On the other hand, an insurance broker represents the insurance buyer and works on their behalf to find the most suitable insurance policy from the available options in the market. Brokers are tasked with comparing different policies and assisting the client in acquiring coverage that meets their needs. In terms of compensation, insurance brokers in Montana are typically paid through commissions that are included in the premium payments made by the client. Brokers are required to provide clients with a statement detailing the commission they will receive before the client finalizes the purchase of an insurance policy. The regulation of insurance agents and brokers in Montana is overseen by the Montana Commissioner of Securities and Insurance, and both agents and brokers must be licensed to operate in the state.