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 Wisconsin, the distinction between an insurance agent and an insurance broker is recognized and regulated. Insurance agents, who may be 'captive' or 'independent,' represent one or more insurance companies and sell their products to consumers. They are typically compensated through commissions from the insurance companies they represent. On the other hand, insurance brokers act on behalf of the insurance buyer, assisting them in finding, comparing, and acquiring insurance policies from the market. Brokers are required to disclose their commission, which is included in the premium payments made by the client. Wisconsin law mandates that both agents and brokers be licensed by the state to ensure they meet professional standards and adhere to regulatory requirements. The Wisconsin Office of the Commissioner of Insurance (OCI) oversees the licensing and regulation of insurance agents and brokers to protect consumers and maintain the integrity of the insurance market.