How to Become an Insurance Broker

Category: Commercial Bonds
Published: Jul 11, 2022

Insurance brokers play a vital role in the economy, as their work helps to protect the finances of individuals, business entities and other organizations across a wide range of circumstances.

Becoming an insurance broker is also an excellent job opportunity for those who like to work with others, and who have an analytical mind. The role involves developing an understanding of plenty of different insurance products, and helping to match the best products for the clients that they best suit.

Furthermore, insurance brokering is an excellent example of how to find well-paying work without further education. Whilst a bachelor’s degree can help brokers to do their job well, the role only requires a high school diploma.

In this article, we’ll help you to understand the role, as well as all of the information you need to get started.

What Does an Insurance Broker Do?

An insurance broker is someone who finds the best insurance policies for their clients. Brokers might be specialists in one type of insurance, or work with a range of risk management solutions, and whilst the licensing requirements may vary, the core concept is always the same.

Insurance brokers analyze the risk portfolio of their clients, and create a price list of the best suited insurance products. They then facilitate the underwriting process within which these products are approved of, and offer ongoing support and advice for their clients once a policy has been taken out.

It’s worth noting that, whilst insurance brokers and insurance agents have similar roles and similar titles, they are different jobs with different licensing requirements. Insurance agents tend to represent the products of a single insurance agency, whereas brokers, will represent multiple insurance companies.

Steps to Becoming an Insurance Broker

Before you can become an insurance broker, you must obtain an insurance broker license, and an Insurance Broker Bond. In this section, we’ll walk you through these processes in easy steps.

Choose a Specialty Of Your Interest

There are many different types of insurance, including health insurance, auto insurance, life insurance and business insurance.

Before beginning the process of becoming an insurance broker, it’s good for you to know what speciality you would like to work with. Doing so will certainly help you to enjoy your work. However, there are also important legal implications, as different licenses are often required to sell particular types of insurance.

Check the Licensing Requirements For Your State

The licensing requirements to become an insurance broker can vary between states, as they are tailored to suit the legal needs of those particular states. For example, the requirements set by the California Department of Insurance are set to match the California Insurance Code. As such, for specific information on the licensing requirements you must meet, you should check with your state Department of Insurance.

That said, there are some common themes amongst licensing requirements. These often include background checks, classes on the ethics of insurance, or on the speciality in which you wish to work. It’s also important that you’ve met the necessary education requirements. This typically means that you must hold a high school diploma.

Once you’ve met these pre-licensing requirements, you are ready to sit your licensing exam.

Pass Your Licensing Exam

Licensing exams typically demonstrate your understanding of how your insurance speciality operates under the law of the state in which you wish to operate, and the content will often match any classes that have been included in your pre-licensing requirements.

Submit Your Application

Once you’ve met all the pre-licensing requirements and passed your licensing exam, you are eligible to submit your application!

Get Your Insurance Broker Bond

The Insurance Broker Bond is a type of surety bond which provides a financial guarantee to protect your clients from any potential fraudulent behavior on the part of the insurance broker. Our team of experts at Lance Surety can help you to obtain your bond as quickly as possible, and for the best possible price.

Get Started!

Once you have received your license, and you’ve obtained your bond, you’re ready to begin working as an insurance broker!

How Much Do the Best Insurance Brokers Make?

Based on the quantity and quality of your insurance sales, as well as your experience and the quality of your training, it’s possible to earn over $123,000 as an insurance broker.

The median salary is approximately $86,500 however. As insurance brokers earn on commission, the best way to increase your income is by working to develop a strong reputation with your clients, and continuing to undertake training and education.

What Are the Best Schools to Become an Insurance Broker?

There are some schools which offer specialist courses in insurance and risk management. Amongst these are the University of Pennsylvania, the University of Georgia and Florida State University.

However, there is a wide range of more general education courses and bachelors degrees which can support your career as an insurance broker. For example, accounting, finance, and business management are all degrees which can help you to advance your career as an insurance broker.

How Long Does it Take to Become an Insurance Broker?

This largely depends on how many of the pre-licensing requirements you have already met when you decide to become an insurance broker.

If you’ve already met all of the requirements, then there may only be a few weeks between starting your process and gaining your license and surety bond.

However, some states require that you undertake 40 hours of schooling before taking your exam.

Equally, if you decide that you want to take an undergraduate degree to support your career, the process may take several years.

FAQs

Why do Insurance agents need a license?

In simple terms, insurance agents need to obtain a license because it’s the law. This is the case because, although insurance has the capacity to save lives, it can cause people significant problems when their insurance is mis-sold or abused.

As such, the insurance industry is very heavily regulated by the government, and licenses help to ensure that those working in the industry act within regulatory and ethical guidelines.

Can you make a lot of money as an insurance broker?

Yes, you can. But if your aim is to make a lot of money, you must be strategic. The ability to simply sell insurance may earn you money in the short term. However, the ability to find the right insurance product for your client is what will earn you client trust, word-of-mouth recognition, and the ability to sustainably develop a strong income over a healthy career.

Do I have to renew my license?

The exact renewal procedure for insurance brokers varies between states, and is also based on your license type. For example, the procedure may be somewhat different depending on whether you are operating under an insurance broker’s license or a producer’s license.

In either case, licenses typically expire after two years, and must be renewed. In some states, such as California, you must complete some continued education every two years in order to become legally renewed.

Hopefully, you should now be well prepared to begin a long and fruitful career as an insurance broker. If you’ve already completed your license application, and are in need of an Insurance Broker Bond, you can apply for a free quote with us today. Our team of experts will find you the best rates possible, so that you can get started as an insurance broker as soon as possible!

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Robin Kix

Robin Kix is currently the Renewal Department Manager. Since joining Lance Surety in 2014, she has helped thousands of businesses throughout the nation remain compliant at the federal, state and local level. She has significant experience supporting commercial bond lines, particularly in the automobile, transportation and construction industries. Robin and her team work together to create a positive customer service experience at the time of every policy renewal, whether that be finding the best pricing or offering additional assistance.