On the surface these two functions seem to be very similar and in some ways they are.  First of all the area most people will encounter agents or brokers are when they are buying a house or buying insurance.  In both of these worlds they function very differently, let’s look at the two.

Real Estate:

When you think about real estate there really isn’t a whole lot of difference in the way your experience would be when dealing with an agent or broker.  An agent is someone who is licensed and can help you with all of the steps you would need to purchase a home.  From showing the home to helping you reach a deal with the seller.  Also if you are considering selling your home the agent can help you do that as well.  So what’s the difference?

A broker has more schooling than an agent and actually holds a different license than the agent.  A broker’s license requires more additional coursework and thus requires the broker to assume some additional responsibilities.  A broker has the ability to open an independent real estate office and he can have agents working underneath him.   In fact an agent has to work underneath a broker in a real estate office.  The broker is ultimately responsible to make sure that the transaction that happens goes through properly.  Because brokers are responsible for agents and completing transactions they do receive override commissions on the work of the agents.  I guess the simplest comparison is a manager to sales rep relationship.

Insurance:

In insurance this is completely different.  An insurance agent has the ability to get contracted to sell insurance on behalf of an insurance company.  He can be a captive agent, which means he is working for one insurance company or he can be a non-captive agent which means he is contracted with several insurance companies.  When I sold health insurance I was a non-captive agent and I was contracted with about 5-6 different companies.  As an agent I was an independent contractor.  Generally speaking captive agents are usually employees of the companies they sell for.  The main difference is that the non-captive agent can give you more choices that hopefully will  fit your budget and your circumstances.  As an agent you are required to obtain licensing in the states you wish to work in.  I was actually licensed in 4 states.  I had the ability to bind insurance coverage which basically means that I could legally obligate the insurance company to provide coverage according to the terms and conditions as bound.  Unlike in real estate, I could’ve hired other agents to work underneath me, which I didn’t do, without securing any additional licenses.  Also unlike real estate I didn’t have to work underneath a broker to sell insurance.

A broker on the other hand doesn’t work for the insurance company and cannot bind insurance.  The broker really works for the person who is looking for insurance.  In short order, the broker works for you.  Their job is to find out all of your needs and to approach insurance companies on your behalf to get quotes and to find the best possible policy for you and your situation.  A broker can only work on your behalf with your written consent and in exchange for their services they will earn a commission once a new policy is issued.  To sum it up an agent works on behalf of the company, the broker works on your behalf.  I have included some simple articles below that answer this question as well.

Real Estate 101 – The difference between an agent and a broker
Insurance Agent or Broker: Which Should I use and What is the difference?
What’s the difference between an Agent, Salesperson, Realtor®, and a Broker?