Term

Insurance broker

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An insurance broker arranges coverage for a policyholder, shopping terms across insurers rather than representing just one carrier. It acts for the client, unlike an agent who represents an insurer, and is usually paid a commission by the insurer it places business with.

The broker sits between a policyholder and the insurers who might cover the risk. Rather than selling one company's policies, it collects quotes from several carriers, compares coverage terms and price, and recommends or places the policy that fits the client's risk. Once bound, the broker typically continues handling renewals, mid-term changes and claims advocacy, acting as the client's point of contact rather than the insurer's.

Brokerage exists because insurance terms are hard to compare unassisted, especially in commercial and specialty lines where policies are individually negotiated rather than off-the-shelf. The common confusion is with an agent: an agent is appointed by and represents an insurer, while a broker's duty runs to the client even though its commission usually comes from the insurer whose policy is sold. The business itself has been consolidating, with larger brokerages acquiring smaller regional ones.

In insurance technology, brokerage is what much of the plumbing is built around: broker management systems that store client and policy data, comparison and quoting tools that pull rates from several carriers at once, and newer AI systems that draft submissions, summarize policy wording or recommend coverage during a renewal conversation. Some tools aim to replace the broker's shopping function outright; most are built to make an existing broker faster rather than remove the role.

Written by Insurtech Daily.

For the running coverage rather than the definition, see the Insurtech hub.

Companies in these stories

American Growth Insurance Rosella Zywave Afori FSL Insurance Brokers Fulcrum Harper IRDAI Jupiter Money MoneySuperMarket Y Combinator 1Fort

Related terms

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