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 West Virginia (WV), the distinction between an insurance agent and an insurance broker is recognized and regulated. An insurance agent acts on behalf of one or more insurance companies, promoting and selling their policies to consumers. These agents may be 'captive,' meaning they represent a single insurer, or 'independent,' representing multiple insurers. On the other hand, an insurance broker represents the insurance buyer and is tasked with finding the best insurance policy from the market that suits the client's needs. Brokers are required to be licensed in WV and must adhere to state regulations that govern their activities, including disclosing their commission to clients. The West Virginia Offices of the Insurance Commissioner oversees the licensing and regulation of both agents and brokers to ensure they comply with state statutes and regulations, including those related to their fiduciary responsibilities and disclosure of compensation.