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 South Carolina, insurance agents and brokers are both involved in the process of helping clients obtain insurance, but they have different roles and responsibilities. An insurance agent represents one or more insurance companies and is responsible for selling the insurance products of those companies to clients. These agents may be 'captive,' meaning they work exclusively for one insurer, or 'independent,' representing multiple insurers. On the other hand, an insurance broker represents the insurance buyer and is tasked with finding the most suitable insurance policy for their client's needs from the available options in the market. Brokers are not tied to any specific insurance company and are expected to provide impartial advice to clients. In terms of compensation, both agents and brokers typically earn commissions from the insurance policies they sell, which are included in the premium payments made by the insured. In South Carolina, brokers are required to disclose the amount of commission they will earn from a policy before the client finalizes the purchase. It's important for consumers to understand these distinctions when seeking insurance to ensure they receive advice that aligns with their best interests.