Have you ever wondered how insurance brokers make their money? Insurance is kind of like gambling; it wins some and loses even more. There are some simple principles you can follow to increase your gross profit as an insurance broker, and I’m going to share them with you in this post.
Insurance brokers are individuals, business entities, or organizations that act as intermediaries between insurance providers and their customers, also known as policyholders. Insurance brokers can work on an independent basis or with an insurance agency.
Are you aspiring to become an insurance broker or already working as one, and you’d like to know how to make money? Here are the top proven ways.
1. Earn Commissions From Selling Insurance Policies
As an insurance broker, you can earn commissions by selling policies to make money. This is the most common way and standard way to measure your salary. Car insurance, pet insurance, and life insurance are the most popular policies sold by brokers.
Insurance companies have different commission structures for different lines of business. Some of the commission is a flat rate and some of the commission is a percentage of the premium. For example, if you sell “life” insurance policies, you will receive a commission on the amount of money required by the policy.
If you sell car insurance, you will receive a percentage of the premium amount. This percentage depends on the company and line of business you’re in. Also, one thing to keep in mind is that if you are an independent agent, you are not limited to just selling policies from one particular company.
SEE: Best life insurance companies
2. Make Money From Service Charges
There are two common types of fees in the insurance industry in the form of service charges in this industry. One is in the form of an administrative charge, in which commissions are considered.
The other is a fee-for-service charge. A fee for service charge is when the insurance broker will receive money or value-added products when they sell or handle products to meet customer requirements.
Service charges are the true source of income for the insurance broker. This will be either in the form of a premium (if you are acting for an insurer’s corporation) or in the form of an agreed percentage of their risk premium (if you are acting for clients).
Brokers obtain their profits from insurance buyers since they are not affiliated with insurance companies. Brokers charge specific rates for delivering professional services to insurers. Furthermore, these charges may vary depending on the policy type and the complexity of the purchase process.
3. Make Money by Hunting for Strategic Partnerships
The insurance business is a humongous one and having an intermediary agent can make things easier for the insured and the insurer. Most of the companies offering you insurance quotes tend to omit small and medium firms from their policies.
Additionally, if you are serious about making money as an insurance broker, you will need to take your business to the next level. There are numerous ways that will require an investment of your time and resources. The most significant way to make money as an insurance broker is via strategic partnerships.
The only challenge is finding the right partner for you. There are certain considerations you should make before taking this step. Make sure to weigh your options even if doing so requires some expenditure of resources.
4. Become an Insurance Policy Consultant
Most individuals are unknowingly paying too much for insurance and they need advice on how to go about it. Besides, insurance is a must for most individuals and families, but it can be difficult to know what to buy for the best protection.
Brokers often take on the role of insurance policy consultants, advising clients on what coverages are appropriate.
If you become an independent insurance policy consultant, not only will you make money as an insurance broker, you will save clients a lot of money. You can help them compare and buy insurance that is affordable and suits their home and auto needs.
If you’re a true insurance broker expert, you can make good money acting as a consultant to insurance companies seeking to hire an independent agent. This can be especially lucrative if you focus on clients in higher-risk professions such as doctors, lawyers, and even real estate agents.
5. Make Money From Claim Support
Claim support is one of the most essential components of insurance. It involves calling previously insured persons when they have filed an insurance claim for help claiming. This is, without doubt, one of the fastest methods to make money as an insurance broker.
In the absence of a professional, filing a claim will be extremely difficult, and it might even become worse. Thus, insurance brokers are available to assist customers who are filing claims. This is because they are well-versed in the claims filing process and have experience working for multiple insurance companies.
Brokers of insurance can charge their clients a certain amount for claim support if they carry out a claim on their customers’ behalf. Any business owner or individual can contact the insurance broker if their property is damaged to assist in settling their claim instead of finding out by themselves.
6. Make Money From Mutual funds and Investments
An insurance broker makes money from many sources. Of late, the largest source of income is from investments from mutual funds and stocks. Also, it’s an agent’s job to keep track of the market and advise clients as to what they should do in terms of investing assets.
Investors who do not consider mutual funds as a money-making vehicle are going to be left behind. Online trading of mutual funds is a perfect way to make a substantial amount of money from investment options.
Leverage your knowledge of the market to invest in mutual funds and other products that provide high returns on investment. Lastly, many brokers claim that a big part of their business is encouraging clients to save for retirement by buying mutual funds, stocks, annuities, and other types of investments.
7. Use Your Contacts for Referrals
Things are changing in the world of insurance, especially when it comes to the business of selling policies. No longer is it enough to put your name on a shingle, hang it out there and wait for the phone to ring. The old way of doing business doesn’t work anymore.
Today, you need to develop strong personal relationships with people in your target market. It is okay to call past clients and ask if they can recommend you to their family, friends, neighbor, etc. In addition, I believe the priority after you become an insurance broker should be getting referrals from your previous clients.
You want them to trust you enough that they are comfortable recommending you to other people. Referral fees make up, on average, more than 80% of most insurance brokers’ annual income.
The very best insurance brokers strive to make it as easy as possible for everyone they deal with, from their customers to their employees and partners, not to mention themselves. I think you’ll find that the commissions are just the icing on the cake.
8. Provide Educational Content for Insurance Companies
A lot of insurance brokers are making money by providing educational content for the companies. It is a kind of training program for new agents to help them learn how to sell insurance products or gain expertise in various policies.
The idea behind the training is simple. Furthermore, if you would like to make money as an insurance broker, you need to know what will sell out there. Numerous ways are available for an inexperienced individual who wants to learn about the industry to become well-informed.
Insurance brokerages provide educational content for insurance companies, sell branded courses on finance and accounting topics, and get paid for it.
SEE: How to make money selling an information product
9. Use Social Media To Market and Advertise What You Do
Social media is an exceptional tool to market your business if you know how to use it correctly. Social media can do everything from getting you inspired by other people’s content, helping you build relationships with your ideal customer base, and of course, getting more people into your network.
The challenge of creating a social media marketing strategy that fits your budget is may require some serious work. It will be easier to create meaningful and creative ads if you take the time to write down your ideal client and what they need before you start. This is especially true for social media platforms like Facebook and Instagram.
Social media is the biggest thing since sliced bread with everyone, so if you can get involved and use Instagram, LinkedIn, and Facebook to advertise and promote what you do to make money as an insurance broker, it will be well worth it.
SEE: Introduction to social media marketing
10. Offer Solutions To Customers, Not Just Products
The average insurance broker today doesn’t spend much time trying to understand their customer. What do they need? What problem are they trying to fix? How can a customer make money as an insurance broker?
If you want to make money as an insurance broker, the best way to go about it is to find solutions to your client’s problems. There are lots of commissions available for finding insurance policies that solve potential problems for your customers, so be on the lookout for them.
For example, if someone’s interested in making sure that their dog, cat, or other pet is protected, don’t sell them just pet insurance. Instead, offer them ways they can resolve the issue at a lower cost. Just because pet insurance may be profitable doesn’t mean it’s the only solution worth considering.
SEE: How to find your audience’s biggest pain points
How Much Money Can You Make as an Insurance Broker?
A broker earns an average annual salary and wage of $50,000. A broker rarely makes more than $100,000. Because more experienced agents and brokers sell more policies and earn more commissions, there is a large difference in their take-home pay.
FAQs
How do insurance agents and brokers differ?
An insurance agent can be a broker, but a broker is not always an agent. The key difference between the two is that agents sell policies from one company while brokers negotiate rates from numerous companies for their clients, allowing more options and better pricing.
Does using an insurance broker make sense?
Yes. Choosing the right insurance broker is vital to your financial well-being. An experienced broker can help you understand your options and select the coverage that best fits your needs. A good broker will have the ability to look beyond what they offer and find better solutions for you from other companies.
How can you become an insurance broker?
Having good experience working in the field of the insurance industry helps you become an insurance broker. You can start your own business or get employed by the existing companies of the insurance industry. To become an insurance broker, you must be licensed by the government.
But before getting licensed, you must get trained for about 6 months. The different courses of training cover the knowledge for offering new policies, renewing policies, and other relevant matters.
Final Thoughts
Achieving ‘success’ in insurance broking is all about establishing what kind of broker you want to be. You can succeed in multiple ways, whether that means earning lots of money or building your brand. It’s your choice.
The most important aspect in terms of how you make money is the clients you choose to work with. They are the foundation upon which everything else is built upon. Besides, as an insurance broker, you have other opportunities to make money. They range from passive income ideas to businesses.
Tosinajy is the go-to blog if you are in search of all kinds of business ideas. Among them are the businesses with low start-up costs where you can start small and grow big. Asides from business ideas, you’ll find guides on how to make money and software to make the process simple for you.
Visit the blog to learn more. Thank you for reading.
