Attorneys And Insurance: A Dual Career Path?

Attorneys and insurance brokers have many transferable skills, and some lawyers choose to become insurance brokers as an alternative career path. Insurance brokers help clients select insurance coverage, acting as intermediaries between consumers and insurance companies. They are well-informed about different types of insurance, such as disability, commercial, and health insurance, and they earn a commission on each policy sold. To become an insurance broker, a college degree in a related field and an insurance license are usually required. Attorneys-turned-brokers can leverage their legal knowledge and analytical skills to help clients navigate the complex world of insurance policies.

Pros and cons of attorneys becoming insurance brokers

Pros of Attorneys Becoming Insurance Brokers

• Flexibility and independence: Insurance brokers have the option to work independently, either from home or their own office, and set their own schedules. This provides a great deal of flexibility and freedom to work according to their own preferences.
• Rewarding work: Insurance brokers play a crucial role in helping individuals and businesses find the right insurance policies to protect their future. They assist clients in navigating the complex world of insurance, ensuring they get the best coverage at the right price. This can be a highly rewarding aspect of the job, knowing that you are making a positive impact on people's lives.
• Strong earning potential: Insurance brokers can earn attractive incomes, with commissions ranging from 4% to 15% of the premium. The potential for high earnings increases with dedication and hard work.
• Job stability: The demand for insurance is constant, providing insurance brokers with job stability. As long as insurance is in high demand, their services will be sought-after. Building strong client relationships can also lead to recurring business and referrals, solidifying their place in the industry.
• Career advancement: The insurance industry offers numerous opportunities for career advancement and specialization. With experience and a strong client base, brokers can move into managerial or executive roles or explore different areas of insurance, such as life, property, or casualty insurance.
• Flexibility in work arrangements: The nature of the job allows insurance brokers to set their own work schedules and often provides opportunities to work from home. This flexibility can be advantageous for those seeking a better work-life balance.

Cons of Attorneys Becoming Insurance Brokers

• Variable earnings: The income of an insurance broker can vary from month to month, as it is typically commission-based. The success of an insurance broker largely depends on their dedication and ability to consistently attract new clients and nurture positive relationships. High-income expectations may not be immediately achievable, and the pressure to meet sales targets can be challenging.
• Training and background checks: Becoming an insurance broker requires completing pre-license training, undergoing a background check, and passing a license exam. The process can be time-consuming and extensive, and any blemishes on one's record may hinder their career prospects in this field.
• Continuing education: To maintain their license, insurance brokers must regularly undertake continuing education and stay updated with industry trends, regulations, and market changes. This ongoing learning can be demanding and may require significant time and effort to stay ahead of the competition.
• Meeting sales targets: Insurance brokers are constantly under pressure to find new clients and retain existing ones, which involves networking, follow-ups, and relationship management. This can lead to long working hours and high-stress levels, especially for those who are new to the industry and still building their networks and expertise.
• Managing client expectations: Clients often have high expectations, and meeting these expectations can be challenging when dealing with complex claims or policy issues. Navigating intricate regulations, understanding detailed policy language, and effectively communicating with clients adds complexity to the role.

The duties and responsibilities of insurance brokers

Insurance brokers act as intermediaries between insurance companies and their clients. They are well-informed about various types of insurance, including disability, health, life, property, commercial, and auto insurance. They have a deep understanding of the insurance marketplace and use their knowledge to find the best policies for their clients.

Evaluate Client Needs and Offer Impartial Suggestions

Insurance brokers start by evaluating their client's needs, risks, and budget. They make informed suggestions and comparisons, offering a range of suitable insurance options from different insurers. Brokers ensure that clients do not double up on their insurance coverage and provide customized policies tailored to their specific circumstances.

Negotiate with Insurers and Secure the Best Deals

Brokers negotiate with insurance companies on behalf of their clients to secure the most competitive rates and favourable terms. They have relationships with multiple insurers, allowing them to access discounts and provide cost savings for their clients.

Assist with the Application and Renewal Process

Insurance brokers guide clients through the insurance application process, making it easier and less time-consuming. They also assist with insurance renewals, renegotiating policies and securing new quotes to ensure continued competitiveness.

Keep Clients Informed and Up-to-Date

Brokers inform policyholders about the details of their insurance policies, including terms, conditions, exclusions, and renewals. They ensure that clients are aware of any changes or updates to their coverage.

Support Clients with Claims

When clients need to make an insurance claim, brokers act as their advocates, speaking on their behalf to ensure timely and accurate payouts. They help clients navigate the claims process, reducing potential hassles and stress.

Comply with Legal and Ethical Standards

Insurance brokers must adhere to strict ethical guidelines and legal requirements. They are responsible for maintaining their licenses, staying up to date with industry developments, and complying with all relevant regulations.

Administrative Duties and Record-Keeping

Brokers handle various administrative tasks, such as scheduling meetings, maintaining records, and processing client accounts. They also collaborate with insurers and underwriters, providing them with necessary reports and documentation.

Marketing and Sales

Insurance brokers engage in marketing activities to attract new clients and promote insurance plans. They employ strategies such as networking and cold calling to identify potential customers and build trust. They also upsell to existing clients, ensuring revenue growth and long-term relationships.

Risk Management Advice

Brokers advise clients on risk management strategies, helping them understand and mitigate potential risks. They guide clients on when and how to make claims, providing valuable peace of mind.

The qualifications and requirements needed to become an insurance broker

To become an insurance broker, you'll need to meet certain educational and licensure requirements. While the process may vary depending on your location and specific situation, here are the key qualifications and requirements you'll typically need to become an insurance broker:

Education:

• Most states in the US only require a high school diploma or its equivalent, such as a GED. However, a higher degree, such as a bachelor's, can be advantageous and may increase your employment opportunities.
• Relevant fields of study include insurance, business, business administration, economics, finance, psychology, mathematics, and communication. A degree in insurance and risk management is less common but can be highly relevant.
• Consider taking a mix of courses to develop essential skills, such as business, maths, and communication, which will be valuable in your career.
• An internship with an insurance firm or agency can provide valuable hands-on experience and help you apply your knowledge in a professional environment.

Specialisation:

Choose a specialisation or "line of authority" that interests you. This could be a specific type of insurance, such as auto, health, property, or life insurance, or a particular client type, such as small business owners.

Pre-Licensure Requirements:

• Research the pre-licensure requirements for your state or location. These requirements vary and may include minimum hours of coursework in specific insurance fields, background checks, and fingerprint submissions.
• If you plan to sell multiple types of insurance or practice in multiple states, you will likely need multiple licenses.

Licensing Exam:

• Once you've met the pre-licensure requirements, schedule and prepare for your licensing exam. You may want to take a short-term course to help you prepare for the exam.
• After passing the exam, you can apply for the qualifying license by submitting the necessary documentation and paying the associated fees.

Registration:

• Complete your registration with the relevant authority, such as the Charted Insurance Institute (CII) or the National Insurance Producer Registry (NIPR).
• If you're selling insurance plans directly to clients, you may also need to register with the Financial Conduct Authority (FCA).

Continuing Education:

To maintain your license, you will likely need to renew it regularly and complete continuing education courses to stay compliant with industry regulations and changes.

Additional Certifications:

Pursuing optional certifications can advance your career and professional development. The National Alliance for Insurance Education and Research offers certifications in areas like counselling, service representation, risk management, and financial planning.

It's important to note that the requirements may differ based on your location and the specific regulations in your state or country. Be sure to review the specific guidelines provided by the relevant regulatory bodies in your area.

The differences between an insurance agent and an insurance broker

While both insurance agents and brokers are licensed professionals who help clients buy an insurance policy, there are some key differences between the two roles.

Who do they represent?

Insurance agents represent the insurance company that employs them and help sell policies from that single provider. They are experts on the offerings from that particular company.

On the other hand, insurance brokers represent the consumers who use them and can help them shop for policies from multiple providers. They are skilled at comparing policies across providers.

Insurance agents can sell insurance and execute an insurance transaction from start to finish. They can help choose and enrol you in a binding policy.

Insurance brokers do not sell insurance directly. They work with clients to compare insurance rates for home, business, auto, and other types of insurance. They must hand over the account to an insurer or insurance agent to complete the transaction.

Insurance agents are contracted or employed by insurance providers. They can be either captive (working for just one insurance company) or independent (representing multiple insurance providers).

Insurance brokers work independently on behalf of consumers. They are independent sales specialists who legally represent their buyers.

Insurance agents work on commission or salary, sometimes both.

Insurance brokers work on commission from the insurer, which comes out of the premiums paid by the clients. They may also charge broker fees.

Who should use an insurance agent or broker?

If you already know which policy you want and do not require specialised coverage, an insurance agent is a good option. They can easily sign you up with no need to compare policies.

If you are too busy to shop around for a plan or want to see plans and quotes from multiple companies, a broker is a better option. They can help compare different types of coverage across different companies.

In summary, insurance agents and brokers have different roles and responsibilities, despite working in the same industry. While insurance agents sell policies on behalf of insurance companies, brokers provide impartial advice to consumers and help them find the best policy for their needs.

The consequences of insurance broker misconduct

Insurance brokers have a duty to exercise reasonable care in procuring the insured's requested coverage. However, they only have limited duties to their clients, and it can be challenging to hold them accountable for professional negligence. To prove professional negligence, the client must prove duty, breach, causation, and damages.

Consequences of misconduct or negligence can vary depending on the specific circumstances and the laws of the relevant state. However, in general, insurance brokers can be held accountable and face litigation for performing their professional duties negligently. For example, if a broker fails to pay the premium after the client has forwarded them the money, or if they fail to procure necessary and available insurance for a client's business, they can be sued for professional negligence.

In some jurisdictions, insurance brokers can also be held liable for breach of fiduciary duty if they fail to inform a client that the policy procured is not what was requested. Additionally, if a broker sides with the insurer and argues against coverage for their client, they may not be able to litigate or dispute the client's damages claim.

Theft of insurance premiums is the most prevalent type of misconduct in the broker industry. Other common violations include senior citizen abuse, health insurance violations, deceptive sales and marketing practices, unauthorized insurance companies, and public adjuster misconduct.

Frequently asked questions