What Is an Insurance Broker License?

Dale Marshall

An insurance broker license is certified authorization to broker insurance; that is, to match clients in need of insurance with companies that will provide it. The license is issued by an appropriate authority, such as the Department of Insurance or similar component of a state government in the US, or by the Australian Securities and Investments Commission in that nation. Applicants for an insurance broker license must demonstrate mastery of a number of topics within the field of insurance in general and often must also have demonstrable experience in the field, usually as a licensed sales agent.

A health insurance broker may help people find the policies that best fit their needs, and offer coverage at their preferred clinics.
A health insurance broker may help people find the policies that best fit their needs, and offer coverage at their preferred clinics.

In the US, each of the 50 states regulates the insurance industry within its own borders, and most have established their own requirements for the insurance broker license. Although many are similar to each other, few are identical. For example, the insurance broker license issued by most states permits the licensee to broker a wide variety of insurance products, from life to health, homeowner’s and auto. Some states, however, require separate licenses for different types of insurance. New York, for instance, requires a life broker’s license for those who want to broker life or health insurance and a separate property and casualty broker’s license for such products as automobile and homeowner’s insurance.

In addition to demonstrating competence and experience in the field, applicants for an insurance broker license must generally prove themselves to be of good character. Convicted felons often are automatically disqualified, for example, especially if they’ve been convicted of financial crimes like embezzlement or misappropriation of client funds. In addition, applicants must undergo routine identity checks to ensure that they are who they claim to be.

The insurance industry in the US is rapidly changing. New products, regulations and concepts are regularly introduced. Many companies and brokers put a great deal of energy and resources into continuing their own and their agents’ education to keep them up-to-date on developments in the industry. In addition, the states require that insurance license holders — brokers and sales agents alike — must undergo continuing education and certify their participation periodically.

Some insurance brokers are concerned about the future of insurance brokering in the US. This is based both on the anticipated consolidation of the health insurance industry, eliminating a good amount of their business. Another modern development is the use of the Internet for researching insurance products. The fear is that there’ll be a significant decline in the business that’s brought to insurance brokers.

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