What is an Insurance Agent
Updated: February 26, 2021|
Updated: February 26, 2021|
The simplest definition of an insurance agent is simply: A person employed to sell insurance policies.
In the real world, “insurance agent” gets used as an umbrella term describing any licensed person in the agency, but the more specific definition describes the agent as the “principal” of the agency.
The agent is the owner of the agency and is generally the person contracted with the insurance company to sell the products that they offer.
There is a local Allstate Agency called the Jensen Agency. Sarah Jensen owns the agency, rents the building, and is the employer of Barb, the CSR (customer service representative) and Thomas, the producer.
They all hold the same licenses with the state, but Sarah is the person who holds the contract with Allstate to sell their products, therefore, she is the “Agent.”
A description of the duties performed by an insurance agent may be better summed up by examining the life of a busy agent:
Sarah is the owner of the Jensen Agency, a local Allstate agency.
Sarah got into insurance sales a few years back while working as an insurance producer for a different agency in her town.
Through the years, she became a well known name in her community. People came up to her in restaurants all the time, just because they knew her from her work as the local insurance person.
One day, Sarah was approached by a representative from Allstate, and was offered an opportunity to open her own agency, selling exclusively Allstate products.
Sarah was sad to leave her agency, but she saw that this opportunity to own her own business looked too good to pass up.
Now that Sarah has owned her own agency for a couple of years, she has the ability to directly influence her income much more than she could as a producer. She sees that the more business she can generate for her agency, the better the business’s bottom line looks.
She has two employees, a customer service representative, and a producer, so the phones are covered, and when a new customer walks in, the producer takes care of the sale (most of the time).
Sarah’s main job is to make sure that the agency has a steady flow of new business coming to it. She is a member of several different community organizations, and much of her time operating the business is spent outside of the office.
She also makes sure that her internet leads and other inbound marketing practices stay operational, and that her producer stays busy with new sales.
Since she has the most responsibility in her office, she also has some stresses that her employees don’t feel. She has to make sure that her accounting is always in order, that the bills are always paid, and that she can always make payroll. She is, in fact, a true business owner.
Who pays an insurance agent? The agency, in most cases, pays the insurance agent. So then, who pays the agency? Depending on how the contract is set up, the agency is usually paid a percentage commission based on the insurance premiums that they sell.
The average percentage of the premium paid is generally between 6% – 15%, again, totally dependent on the agreement between the agency and the writing insurance company.
How a small business owner decides to pay their own salary is up to them. Here are the best numbers that we could find describing the salaries of insurance agents in each state.
|State||Salary Range of Insurance Agent||Average Income Per Capita|
|Alabama||$24,000 – $68,000||$23,500|
|Alaska||$28,000 – $39,000||$33,000|
|Arizona||$24,000 – $33,000||$25,700|
|Arkansas||$29,000 – $82,000||$22,800|
|California||$24,000 – $105,000||$30,400|
|Colorado||$30,000 – $68,000||$32,300|
|Connecticut||$30,000 – $67,000||$39,300|
|Delaware||$24,000 – $62,000||$30,400|
|Florida||$32,000 – $174,000||$26,500|
|Georgia||$24,000 – $105,000||$26,600|
|Hawaii||$38,000 – $65,000||$29,700|
|Idaho||$31,000 – $59,000||$28,300|
|Illinois||$29,000 – $180,000||$30,400|
|Indiana||$25,000 – $115,000||$25,100|
|Iowa||$31,000 – $83,000||$28,300|
|Kansas||$26,000 – $78,000||$27,800|
|Kentucky||$31,000 – $105,000||$23,600|
|Louisiana||$28,000 – $84,000||$24,800|
|Maine||$28,000 – $58,000||$27,900|
|Maryland||$25,000 – $59,000||$36,300|
|Massachusetts||$33,000 – $83,000||$36,500|
|Michigan||$24,000 – $103,000||$26,600|
|Minnesota||$24,000 – $84,000||$32,600|
|Mississippi||$34,000 – $76,000||$21,000|
|Missouri||$24,000 – $94,000||$26,100|
|Montana||$34,000 – $38,000||$25,900|
|Nebraska||$30,000 – $53,000||$27,400|
|Nevada||$33,000 – $82,000||$25,700|
|New Hampshire||$33,000 – $104,000||$34,600|
|New Jersey||$35,000 – $71,000||$37,200|
|New Mexico||$29,000 – $78,000||$23,600|
|New York||$29,000 – $137,000||$33,000|
|North Carolina||$29,000 – $166,000||$25,700|
|North Dakota||$26,000 – $48,000||$33,000|
|Ohio||$25,000 – $116,000||$26,900|
|Oklahoma||$29,000 – $179,000||$25,200|
|Oregon||$24,000 – $132,000||$27,600|
|Pennsylvania||$26,000 – $114,000||$29,200|
|Rhode Island||$25,000 – $52,000||$30,800|
|South Carolina||$25,000 – $156,000||$24,500|
|South Dakota||$24,000 – $26,000||$26,900|
|Tennessee||$29,000 – $206,000||$24,900|
|Texas||$29,000 – $157,000||$27,100|
|Utah||$24,000 – $107,000||$24,800|
|Vermont||$33,000 – $63,000||$34,000|
|Virginia||$25,000 – $170,000||$34,000|
|Washington||$24,000 – $67,000||$31,800|
|West Virginia||$29,000 – $55,000||$22,700|
|Wisconsin||$29,000 – $204,000||$28,200|
|Wyoming||$40,000 – $44,000||$29,600|
The information in this table is gathered from a couple of sources. Salary ranges were provided by individual members of Glassdoor.com. Income per capita figures are based on the year 2014, and gathered from this Wikipedia page.
The comparison between the salary and the average income is helpful in showing how this job type stacks up against the average job in the state. Take the information with a grain of salt, as the salaries are submitted by private individuals, and the average income per capita does not take state unemployment rates or other factors.
There are a couple of different ways to become an insurance agent. The biggest decision you will make when exploring the opportunity is whether to become a captive agent (selling one brand) or an independent agent (contracted with multiple companies).
Each different company that you wish to contract with will have different requirements that you must bring to the table.
One thing that is a requirement for any direction that you take is licensing. You must have your insurance license to become an insurance agent.
Be sure to do your research before you jump into a contract with a company. Every opportunity is different, so be sure to pick the one that will suit your situation the best.
If you're looking for new job or to start your career in insurance, find an open position on StateRequirement's:
Information on this page has been gathered by a multitude of sources and was most recently updated on July 2020.
You can find independent insurance agent jobs here.
Any Information on this site is not guaranteed or warranted to be correct, accurate, or up to date. StateRequirement and its members and affiliates are not responsible for any losses, monetary or otherwise. StateRequirement is not affiliated with any state, government, or licensing body. For more information, please contact your state's authority on insurance.
When readers purchase services discussed on our site, we often earn affiliate commissions that support our work. Learn More