What is the difference between an agent, broker, or consultant?

It is important for plan managers and other stakeholders to understand the common differences between agents, agent of record or brokers, and consultants. Under most circumstances the difference between these three entities is a function of how they are compensated and on whose behalf they are legally obligated to serve:

Agents are legally obligated to work in the best interests of the insurance carrier they represent. Their compensation is a commission that is not subject to review or approval by the college or university. Agents who refer to themselves as brokers, however, may be doing so in the context that they represent more than one insurance vendor rather than having a formal brokerage appointment from the college or university.

Agents of Record or Brokers are legally obligated to work in the best interest of the college or university. They receive a commission that is agreed upon by the college or university. The agent of record or broker often prepares request for proposal documents and helps to obtain proposals from insurance carriers. They then often assist the college or university in reviewing the proposals, conducting vendor interviews, assisting with program implementation program, conducting annual renewal negotiations, and often providing routine daily services that would often otherwise be provided by an agent of the insurance carrier.

Consultants are legally obligated to the work in the best interests of the college or university and are usually compensated on a fee basis. The consultant should not have any other financial relationships with insurance carriers or other potential vendors (including acting as an agent for insurance carriers at other locations). Consulting services may be expanded to include actuarial and/or legal work (often through sub-contractors of the consultant) for assistance in managing partially self-funded programs or other alternative funding arrangements.