How to become an insurance broker in Canada

Insurance brokers have a vital role in helping small businesses, organizations, and individuals find the coverage that will fit their needs best. If you are fresh out of college or want to try a new career path, then becoming an insurance broker may be worth considering.

Getting to know how to become an insurance broker can be helpful as you prepare the necessary documents, meet the requisite educational requirements, and choose what insurance courses to take. If you’re new to the insurance industry in Canada, you can use this information for clues on what it’s like to work in insurance.

In this guide, Insurance Business shows you how to become an insurance broker in Canada. We’ll show you the steps involved in becoming one and provide insight into these important questions:

• Can anyone be an insurance broker?
• What do you need to become an insurance broker?
• How much does it cost to become an insurance broker?

What does an insurance broker do?

In a nutshell, the main role of an insurance broker is to act as an intermediary between their clients and insurance companies. They work to make sure that their clients find the best insurance coverage that is suitable for their needs.

Apart from performing this service, insurance brokers:

• Evaluate clients’ insurance needs – To find the most suitable coverage, insurance brokers assess their client’s business operations, risk tolerance, and other needs.
• Provide options – Brokers can look at several different insurance companies on behalf of their clients to find the most fitting policies.
• Negotiate rates – Brokers typically work for clients to find the most favourable rates from insurance companies.
• Represent clients – When making claims, brokers collect on insurance policies on their client’s behalf.

An important note about insurance brokers is that they also have a fiduciary duty to their clients – that is, a duty to act in their clients’ best interests.

Educational requirements across all provinces

Before you embark on your journey and learn the ins and outs of how to become an insurance broker, it’s important to have the prerequisite education. Most provinces in Canada require that an insurance broker candidate meet basic educational requirements.

Fortunately, you will only need to have a high school diploma or GED equivalency to qualify for an insurance broker licence in most Canadian provinces. The only exception is British Columbia, which requires a college degree.

Note that a college education is not a mandatory requirement for the process of becoming an insurance broker in Ontario and the other provinces. However, a university degree is not to be scoffed at – you can learn the foundational knowledge plus a few skills that can be helpful to you as you learn the ropes. These are some of the useful college degrees:

• accounting
• actuarial science
• business management
• business law
• communications
• finance
• economics
• mathematics
• marketing
• psychology
• sociology

If you are a fresh graduate with any of these degrees, you can also have an edge when applying for other roles in big insurance companies or agencies. It’s likewise possible to apply the knowledge gained from these college courses to become an insurance agent.

Insurance broker vs insurance agent: what’s the difference?

There may be some confusion as to the definition of insurance broker and insurance agent. Some people may use these terms interchangeably, but insurance brokers and insurance agents are not the same. Here’s how they differ:

Insurance brokers

• They act as intermediaries between clients and insurance companies; brokers represent their clients and find the most suitable insurance policies by negotiating with multiple insurance companies.
• Insurance brokers work independently and can deal with many different insurers to give their clients more coverage options.
• Brokers are more flexible and can pore through different policies and providers; they aren’t tied to a single insurance company.
• In terms of compensation, brokers get paid via commissions based on the premiums paid on the policies they sell; sometimes they earn additional fees for other services provided.
• Brokers need to obtain their licence from their province’s broker licensing authority (e.g. Registered Insurance Brokers of Ontario or RIBO) and must fulfill continuing education (CE) requirements to maintain their licence.
• Brokers must adhere to a stringent fiduciary duty to their clients, meaning they have a duty to act in their clients’ best interests – interestingly, brokers can also offer fiduciary liability insurance to clients.
• Insurance brokers are more likely to build long-term relationships with their clients, frequently offering ongoing advice. As their clients’ needs change, brokers reevaluate coverage and assist in managing claims and buying policies.
• Brokers often provide a wide range of services ranging from policy negotiation, risk assessment, policy management, and handling claims processing and filing.

Insurance agents

• Insurance agents represent companies, not their clients. They can represent just one (captive agents) or multiple insurance companies (independent agents), selling these companies’ insurance policies on their behalf.
• An insurance agent’s main role is to sell insurance products to clients.
• Insurance agents earn commissions from the insurance company or companies they represent. They may receive one-time commissions on insurance sales or get residual commissions from policy renewals. Captive agents often receive a base salary with commissions, while independent agents earn commissions only.
•  Agents have licensing requirements that vary depending on whether they sell life insurance products or general insurance.
• They are not bound to the same level or type of fiduciary duty as insurance brokers, depending on whether they are working as captive or independent agents.
• Agents do not focus on building long-term relationships with clients; rather, emphasis is placed on the initial insurance sale and immediate client meeting. Some agents may maintain continuing relationships with their clients, but these can be mostly follow-ups for the insurance sale.
• Unlike brokers, insurance agents focus on selling insurance products and can have minimal involvement in processing or filing claims – the insurance companies they represent often take charge of this. Insurance agents typically explain policies to clients and assist in the application process.

Read more: What is the average salary of an insurance agent in Canada?

Different types of insurance broker

Insurance brokers come in a wide range of types, varying according to different characteristics. Here are the different types to guide you as you begin your career as an insurance broker in Canada:

1. Independent insurance brokers

As the name implies, this type of broker works autonomously and is not exclusive to any one insurance company. Independent brokers can represent multiple insurers, providing their clients with a variety of coverage options.

2. Exclusive insurance brokers

Also called captive brokers, this type of broker is employed by a single insurance company and is authorized to sell only the products of the insurance company that employs them.

3. Online insurance brokers

This type of insurance broker has grown rapidly in popularity due to advances in fintech. Online insurance brokers work through digital platforms, enabling their clients to compare insurance quotes quickly and efficiently.

4. Specialty insurance brokers

These brokers are focused on niche markets within the insurance industry. They can handle unique products like marine, aviation, or high-value insurance for satellites launched into space.

For a clearer picture of what it’s like to work as an insurance broker, here’s a video showing a day in the life of a broker in Alberta. She also offers interesting tips about the insurance industry and how to meet its challenges. Watch the video to know more:

How to become an insurance broker

While the process can vary depending on your educational and professional background and other factors, these are the steps on how to become an insurance broker in most parts of Canada:

Step 1. Decide on your education.

There is little formal education required of an insurance broker apart from a high school diploma or GED equivalent. However, the province of British Columbia is an exception, requiring that insurance broker candidates have a university degree. Some degrees can include business law, business management, economics, finance, accounting, communications, and psychology.

So, while a university degree is not required, having one does confer certain advantages. A degree can give you foundational knowledge and understanding of the insurance industry even before you apply for a job. Keep in mind that some educational institutions offer degrees in insurance and risk management, but this isn’t as popular or familiar as the other recommended degrees.

Step 2. Choose an insurance specialty.

There are several different types of insurance, and these are called lines of authority. Insurance broker candidates can choose from many different types of insurance, such as:

• Life insurance
• Sickness, accident, and health insurance
• Property & casualty (commonly called P&C)
• Disability
• Homeowner’s insurance
• Tenant insurance
• Commercial lines
• Auto insurance

Remember, the specialty you choose can be the one you work on for a very long time, so be sure to choose a specialty that interests you. Choosing a specialty that you like can increase your chances of success in the field. Also, most provinces require a separate insurance licence for the different types, so having a firm grasp of your specialty can help you pass the exams and make licensing go smoothly.

Step 3. Meet the licensing requirements.

Different provinces may have varying licensing requirements. In this case, it helps to study your province’s prelicensing requirements and fulfill them. Every province requires brokers to have a licence, although their specific requirements may vary. Most of these provinces demand that brokers hold several licences, each for the type of insurance they want to offer. If a broker wishes to sell insurance in more than one province, they must appliance for a licence in each of them.

Step 4. Pass the licensing exams.

You can schedule your licensing exam and pay the exam fees once you’ve fulfilled the prelicensing requirements. These can typically be done online. Most provinces have short courses you can take in preparation for the insurance broker exam. In most cases, you will have to go to a physical testing site where a third-party provider proctors the exam. You may be asked to show proof of having met all the prelicensing requirements to be allowed to take the exam.

Most provinces will have you take the exam on a computer, and the test will be in multiple choice format. Given that the test is digital, you may immediately see the test results. If you don’t pass the exam on your first try, you can reschedule another test.

Step 5. Apply for the broker licence.

You can apply for the qualifying licence after you’ve passed the licensing exams. The application process involves completing an application form, verifying your compliance with prelicensing requirements, showing proof of passing the licensing exams, and paying a processing fee.

Once you’ve received your formal licence, you can then solicit, discuss, negotiate, and transact insurance policies. You can then build your roster of clients or apply for jobs at insurance brokerages or companies. Note, however, that you will have to earn continuing education credits to maintain your licence.

Step 6. Obtain optional qualifications.

For some insurance brokers, having the licence is not sufficient to advance their careers. To further their careers, some insurance brokers opt to acquire additional certifications. Depending on your location, you can get voluntary certifications from organizations like the Insurance Council of Manitoba or the Registered Insurance Brokers of Ontario (RIBO) or other groups. Additional certifications can include:

• Insurance counselling
• service representative
• risk manager
• financial planner

Note that these optional certifications require experience, coursework and exams.

Are insurance brokers in demand in Canada?

Yes. According to government figures, it’s expected that there will be 40,500 new job openings for insurance agents and brokers beginning in 2022 through 2031. However, it’s projected that there will be about 50,600 new job seekers wanting to fill them.

The job of insurance broker can be promising for fresh graduates entering the workforce, insurance professionals who want a change, or even those shifting from an entirely different career path. As the demand for insurance brokers will continue to grow in the next few years, aspiring brokers can look forward to a career that can not only be lucrative, but also very fulfilling.

Did you find this guide on how to become an insurance broker helpful? Share your thoughts in the comments.