Casualty Actuarial Society (CAS) Practice Exam

How do agents and brokers primarily differ in their roles?

1. Agents independently assess risks while brokers represent multiple insurers

2. Agents place insurance with insurers they represent, while brokers place insurance independently

3. Agents focus on claims management, while brokers handle underwriting processes

4. Agents work with clients directly, while brokers source insurance products

The correct answer is: Agents place insurance with insurers they represent, while brokers place insurance independently

The primary distinction between agents and brokers lies in their relationships with insurers and the nature of their roles in the insurance market. Agents are typically representatives of a specific insurance company, meaning they have a contractual obligation to place business with that particular insurer. They directly interact with clients to facilitate the purchase of insurance policies from the companies they represent. This relationship creates a more direct link between the agent and the insurer, as agents are aligned with the interests of their company. On the other hand, brokers operate independently from insurers. They represent the interests of the clients and have the ability to shop around and source insurance products from multiple insurers. This independence allows brokers to assess a broad range of coverage options, helping clients find the best policy to meet their specific needs. Brokers are not limited to one company's offerings, which provides clients with more choices in the marketplace. This differentiation in roles highlights the level of independence and representation involved: agents represent insurers, while brokers represent clients and navigate the options available across various insurers.