Difference Between Insurance Agent and Insurance Broker

Who is a Insurance Agent?

Economic Times defines Insurance Agent as "An agent is a person who represents an insurance firm and sells insurance policies on its behalf. Generally, there are two types of such agents who reach the prospective parties that may be interested in buying insurance. These are independent agents and captive or exclusive agents"

In Insurance Act, 1938 Insurance Agent is defined as follows " an insurance agent licensed

under section 42, who receives or agrees to receive payment by way of commission or 

other remuneration in consideration of his soliciting or procuring insurance business 

including business relating to the continuance, renewal or revival of policies of insurance"

Under Section 42 Following Has To Be Kept In Mind Before Giving License:-

"The Authority or an officer authorised by it in this behalf shall, in the manner determined by the regulations made by it and on payment of the fee determined by the regulations, which shall not be more than two hundred and fifty rupees, issue to any person making an application in the manner determined by the regulations, a licence to act as an insurance agent for the purpose of soliciting or procuring insurance business: Provided that,—a) in the case of an individual, he does not suffer from any of the disqualifications mentioned in sub-section (4); and
b) in the case of a company or firm, any of its directors or partners does not suffer from any of the said disqualifications:
The disqualifications above referred in section 42(4) to shall be the following:—(a) that the person is a minor;
(b) that he is found to be of unsound mind by a court of competent jurisdiction;
(c) that he has been found guilty of criminal misappropriation or criminal breach of trust or cheating 1 or forgery or an abutment of or attempt to commit any such offence by a court of competent jurisdiction:
Provided that where at least five years have elapsed since the completion of the sentence imposed on any person in respect of any such offence, the Authority shall ordinarily declare in respect of such person that his conviction shall cease to operate as a disqualification under this clause(d) that in the course of any judicial proceeding relating to any policy of insurance or the winding up of an insurance company or in the course of an investigation of the affairs of an insurer it has been found that he has been guilty of or has knowingly participated in or connived at any fraud, dishonesty or misrepresentation against an insurer or an insured.
(e) that in the case of an individual, he does not possess the requisite qualifications and practical training for a period not exceeding twelve months, as may be specified by the regulations made by the Authority in this behalf;
(ea) that in the case of a company or firm making an application under sub-section (1) or sub-section (3), a director or a partner or one or more of its officers or other employees so designated by it and in the case of any other person, the chief executive, by whatever name called, or one or more of his employees designated by him, do not possess the requisite qualifications and practical training and have not passed such an examination as required under clauses (e) and (f);]
(f) that he has not passed such examination as may be specified by the regulations made by the Authority in this behalf:
Provided that a person who had been issued a licence under sub-section (1) of this section or sub-section (1) of section 64UM shall not be required to possess the requisite qualifications, practical training and pass such examination as required by clauses (e) and (f);(g) that he violates the code of conduct as may be specified by the regulations made by the Authority."

Who is a Insurance Broker?

Wikipedia defines insurance broker as "An insurance broker sells, solicits, or negotiates insurance for compensation" 

Difference Between Insurance Agent and Broker:-

There is a relation of Agency between agent and insurer. So Insurer is the principal. One can sue the insurer for defaults of agent. In the case of insurance broker this relation is of a advisor that's too, towards  insured and not insurer. So there is no fiduciary relation between broker and insurer.

The agent's primary alliance is with the insurance carrier, not the insurance buyer. In contrast, an insurance broker represents the insured, generally has no contractual agreements with insurance carriers, and relies on common or direct methods of perfecting business transactions with insurance carriers. This can have a significant beneficial impact on insurance negotiations obtained through a broker (vs. those obtained from an agent).