An insurance producer is a licensed representative authorized to sell, solicit or negotiate insurance in one or more categories. Selling refers to exchanging a contract regarding the insurance, while soliciting implies the act of convincing a client to apply for insurance, and negotiating is the process of explaining and offering advice to a prospective client. Health insurance and life insurance are two of the major types of insurance that producers work with, and an insurance producer license must be obtained in the field that the producer chooses to work in.
To receive an insurance producers license, an instruction course must be taken and an examination passed. This follows an undergraduate curriculum in which the producer usually majors in business, economics or finance and receives a bachelor’s degree in one of these areas. After the test is passed, a licensing fee must be paid before he or she can begin to sell insurance. The producer is only eligible to practice in the state he or she took the exam in and states that have a reciprocity agreement with his or her home state, and the license must be renewed periodically. This requires several hours of continuing education courses each year to stay on top of the industry trends and knowledge.
An insurance producer is similar to an insurance agent, but an agent is appointed by the insurer to act on his or her behalf. The insurer is often a firm or company rather than an individual client, and if the producer is working with an insurer, commissions, brokerages and service fees must be paid or assigned accordingly. Insurance producers are typically appointed by at least one company to conduct business rather than being responsible for finding individual clients. This is how they differ from insurance brokers. Producers, however, are still regarded as individual businesspeople rather than as employees of companies or firms.
Insurance producers earn a substantial portion of their living through commissions. Each time an insurance premium payment is made, the producer earns part of that amount. The producer has two main functions: to help insurance companies sell the policies and to provide follow-up service to the clients. Selling the policies involves educating the clients on the type of policy that works best for them based on their finances and lifestyle. Follow-up service includes submitting all paperwork and providing continued service for the clients based on their needs and circumstances.