Insurance brokers play a crucial role in helping their clients find the coverage best suited for their needs. Most seasoned professionals cite this as one of the main reasons why they chose the insurance broker career path.
This guide on how to become an insurance broker can be a useful resource for aspiring industry professionals. We explain what an insurance broker does, what it takes to become one, and how important the role is in the insurance industry.
The primary role of an insurance broker is that of an intermediary between buyers and insurance companies. An insurance broker assists individuals and businesses in finding policies that cater to their unique needs. These industry professionals can work independently or as part of an insurance brokerage firm.
As they are not bound to a single insurer, insurance brokers can offer customers more coverage options compared to agents who work directly for insurance carriers. This also gives them the freedom to place policies with different providers depending on the market conditions, allowing them to access the best possible protection for their clients.
Knowing that you played a key role in helping clients achieve financial protection is what makes being an insurance broker fulfilling, so it’s not surprising that many are considering this career path. But to be successful, one needs to have a thorough understanding of how the US insurance industry works.
So, what does it take to become an insurance broker? For those seriously considering this career path, here are the important steps to become an insurance broker:
As with many other professions, there are minimum requirements that a person must meet if they are planning to become an insurance broker. These may vary depending on the region, but in the US, aspiring brokers must:
While a college degree is not required for the insurance broker application process, enrolling in relevant courses can help you stand out when applying at brokerages. This is relevant, because one route to becoming an insurance broker is to get internships or entry-level jobs at an insurance agency or brokerage.
If you decide to become a broker early on, many insurance broker training programs recommend earning a bachelor’s degree in:
Some universities now offer specialized insurance and risk management programs, which can provide a focused insurance broker study guide for those preparing to enter the field. Courses in communications, psychology, or sociology also help develop the interpersonal skills needed for establishing strong client relationships.
To get hands-on experience, aspiring brokers can participate in insurance broker training programs or internships with established agencies. These opportunities allow you to observe the daily operations of an insurance business and gain practical knowledge.
Working as an intern or trainee at an established brokerage can teach you a lot about insurance broker license requirements and state insurance licensing processes. High-performing interns may receive job offers after completing their training. Mentorship programs and participation in insurance broker professional associations can further support your growth and provide valuable insurance broker networking tips and opportunities.
To become an insurance broker, candidates must meet each individual state’s licensing requirements. While this general process applies to most states, there can be differences in requirements that can range from slight to substantial differences in each state.
For example, how to become an insurance broker in Texas can be vastly different from what’s needed for how to become an insurance broker in New York. This typically involves completing pre-licensing coursework, passing an insurance broker background check, and registering for the insurance broker exam.
Preparation for the insurance licensure exam is important, and many candidates resort to using an insurance broker study guide to review key topics. Exams may include the Series 6 or Series 7, administered by the Financial Industry Regulatory Authority (FINRA), depending on the lines of authority you wish to pursue.
If you plan to operate in multiple states, you must meet each state’s insurance broker state regulations and complete the necessary registration steps. You may also need to pass additional exams if you want to sell different types of insurance, such as life, health, or property and casualty policies.
Most US states require insurance brokers to secure a broker bond before they are allowed to sell policies. This is according to the national industry association Independent Insurance Agents & Brokers of America (IIABA). Broker bonds are a type of surety bond aimed at holding brokers accountable for their actions.
This also helps protect the public from potential fraud.
Most states require continuing education (CE) courses for brokers to maintain their licenses. They may also consider obtaining additional certification in a line they have developed expertise to further their professional development and job prospects.
The National Alliance for Insurance Education and Research (NAIER) offers several voluntary certifications, including those for counseling, customer service, risk management, and financial planning. These, however, require experience, coursework, and exams. These courses help you stay updated on changes in insurance broker state regulations and industry trends.
Many brokers also pursue additional certification in specialized lines to improve their insurance broker job outlook. Participating in insurance broker mentorship programs and professional associations can further enhance your skills and expand your professional network.
As a representative of the consumers, brokers are responsible for helping insurance buyers evaluate their risks and match them with the right policies based on their risk profiles and financial resources.
Some states in the US impose fiduciary duties on these professionals, meaning they are legally required to act only in the best interest of their clients. They are likewise expected to guide consumers through the entire insurance-buying process.
Customers may encounter three types of insurance brokers on their way to finding the right policies. These are:
Working closest with the insurance buyers, these client-facing professionals assist clients in finding the best possible coverage, often dealing with less complex policies that cover common risks.
These brokers offer more specialized products and rarely have direct contact with insurance buyers. Instead, retail brokers go to them for policies that cover more complex risks.
These professionals hold special licenses that allow them to access products for highly complex risks that standard insurers are not willing to cover. They can act as either retail or wholesale brokers and offer products from surplus lines specialists, also referred to as non-admitted insurers.
Apart from insurance products, some insurance brokers provide risk management services. These include advising customers on how to control risks that may not be covered under their policies.
Despite acting primarily as a representative of the insurance buyers, brokers still owe insurers certain responsibilities. These include ensuring that the information they disclose to the underwriters during the application process is factual and truthful, and that policyholders pay premiums on time.
Several insurance companies also give insurance brokers the power to quote, bind coverages, and handle claims. Here is a summary of the duties and responsibilities of an insurance broker:
Annual salaries can vary depending on which state, industry, or market the broker operates in. Here are some the highest-paying states for insurance brokers according to the latest report from Zippia.com:
| Rank | State | Average Annual Salary |
|---|---|---|
| 1 | Washington | $109,320 |
| 2 | Wisconsin | $107,840 |
| 3 | District of Columbia | $107,465 |
| 4 | South Dakota | $104,010 |
| 5 | New Hampshire | $102,380 |
The average annual salary for insurance brokers in the US is about $94,000. Top-paying states offer salaries well above the national average. Use this important statistic to guide your insurance broker salary expectations.
While many insurance brokers, especially those working in brokerages, receive regular salaries, they also generate income in two ways:
For each completed transaction, insurance companies pay brokers a commission, which is a percentage of the policy’s total annual premiums. Depending on state regulations, the commission amount ranges between 2 percent and 8 percent of the premiums.
Some insurance brokers offer consultative and advisory services to clients. These services come with a corresponding fee, which is often state regulated.
These two professionals are often confused with each other, but there is a huge distinction between an insurance agent and an insurance broker. Unlike brokers who are not obligated to sell policies for specific insurance companies, agents are contracted to distribute the products of their partner insurers.
There are two types of insurance agents:
Like insurance brokers, independent agents act as an intermediary between customers and the insurer. Read our story about an independent broker succeeded with his own insurance broker business setup. On the other hand, captive agents represent insurance companies, so the coverage options are limited to those offered by their partner carriers.
Typically, agents also have contracts with insurance providers, detailing what policies they are allowed to sell and the amount they can expect to make from selling these policies. Another key difference is that because of their links to the insurers, agents have the power to bind coverage, something that most insurance brokers cannot do.
Get to know the Top Insurance Brokers and Agents in the USA on IB's special reports here.
Earning money and working as an insurance broker in the US can be challenging, especially for those just starting out. Income is often commission-based, so success depends on building a client base, networking, and sales skills.
Entry-level brokers typically earn less while they establish themselves, but experienced brokers with strong client relationships can earn well above the national average. The field is competitive, but brokers who are persistent, knowledgeable, and proactive about professional development tend to see better results.
After meeting all the eligibility requirements, it’s crucial for you to develop your sales and social skills. Much of your success as an insurance broker depends on how well you relate to people, how well you build trust and strengthen your relationships with clients.
Apart from developing your social skills, you must master the insurance products you specialize in and stay updated with industry trends and regulatory developments. Having strong product and industry knowledge helps you build trust with your clients, since you’ll be well-equipped to recommend the most suitable policies.
Reach out to potential customers, follow up on leads, and nurture relationships with those you already serve. Consistently delivering excellent customer service is likewise essential; always respond quickly, communicate clearly, and act with integrity. Remember to stay current with your state’s licensing requirements and complete any CE requirements to maintain your credentials.
Finally, don’t hesitate to use technology to organize your workflow and join professional associations to connect with mentors and peers. Speaking of mentors, seek out one who can give you insurance broker success tips and has the relevant experience – like knowing how to become an insurance broker with no experience. By focusing on these fundamentals, you’ll lay the groundwork for a successful and rewarding career in insurance broking.
Searching for a role model for success? Visit our Best in Insurance Special Reports page where we feature the industry’s most respected and reliable leaders.
