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Who Advises Whom? The Great Comparison: Agent vs. Broker vs. Consultant

  • 2 days ago
  • 4 min read

Anyone wishing to take out insurance often faces a jungle of terminology. Is the friendly advisor truly independent? Or do they have to sell their employer's products? Here is the overview of the three main players in the German insurance market, their legal obligations, and why a look into the law books (§ 86 HGB) can be an eye-opener.




The Insurance Agent (Versicherungsvertreter)

The Insurance Broker (Versicherungsmakler)

The Insurance Consultant (Versicherungsberater)

(Tied Intermediary according to § 34d Para. 7 GewO)


Who they work for: The insurance agent (often called an "exclusive agent") works on behalf of a specific insurance company or a sales organization. They are the "extended eyes and ears" of the insurance company.


What they offer: They can only mediate products from the companies to which they are contractually bound.

  • The classic example: An Allianz agent mediates only Allianz products.

  • The sales organization example: Advisors from large financial sales organizations like Deutsche Vermögensberatung (DVAG) also legally fall into this category (as commercial agents). They mediate exclusively the products of their fixed premium partners (e.g., in the case of DVAG, often Generali). A comparison with cheaper or better-performing tariffs from other providers (such as HDI, Alte Leipziger, etc.) is systemically impossible for them.


The Legal Catch (§ 86 HGB): Whose Bread I Eat... Many clients do not know that the agent's loyalty is regulated by law. The German Commercial Code (§ 86 HGB) explicitly states regarding the duties of the commercial agent:

"The commercial agent must (...) safeguard the interests of the entrepreneur [the insurance company]."


This means: The legislator obliges the agent to protect the interests of the insurance company. Especially in structured sales organizations, economic pressure is often added: The Career Plan. Remuneration and promotion often depend on achieving strict sales targets ("units"). This creates a systemic incentive to recommend products that secure the advisor's next career step, even if there were better alternatives for the client in the market.

(Independent Intermediary with License according to § 34d Para. 1 GewO)


Who they work for: The insurance broker works on behalf of the client. They are legally obliged to safeguard the client's interests. The Federal Court of Justice (BGH) describes them as the "Trustee" (Sachwalter) of the policyholder.


What they offer: They are not bound to any insurance company. They have the duty to find the suitable product for the client from a broad market offering. This means: They compare tariffs from different providers objectively.


Remuneration: Classically, they are remunerated via a brokerage fee (commission). Since 2018, however, they can also work on a fee basis (see below).


Position towards the client: Unlike the agent, they legally stand "in the client's camp." They are liable if they do not select the product that meets the client's needs.

(Legal Service Provider with License according to § 34d Para. 2 GewO)


Who they work for: The insurance consultant also acts exclusively on behalf of the client and is completely independent.


What they offer: They analyze the market neutrally or check existing contracts, often focusing on complex legal questions or restructuring.


Remuneration: The decisive difference: They are not allowed to accept commissions. They are paid exclusively and directly by the client (hourly rate/flat fee).


Position towards the client: They offer pure, independent legal advice for a fee.



Since the implementation of the EU Insurance Distribution Directive (IDD) into German law in 2018, insurance brokers have also been allowed to offer fee-based advice to their clients.

Here are the crucial points and the differences that have arisen as a result:

The New Freedom for Brokers (IDD Implementation since 2018)

Since 2018, insurance brokers have also been allowed to work more flexibly. Previously, fee-based remuneration was almost exclusively reserved for the insurance consultant. Today, the broker can choose:


  1. Commission Basis (The Standard): Mediation of "Gross Policies." The costs are included in the premium.

  2. Fee Basis / Fee-Based Brokering: Mediation of "Net Policies" (commission-free). The client pays a separate fee for the mediation service.


Important: The broker offers fee-based brokering (Honorarvermittlung). The protected title "Insurance Consultant" (Versicherungsberater § 34d Para. 2) remains reserved for those who work exclusively for a fee. Conclusion: Checking the Imprint Protects You

Before you start a consultation, check the status in the Imprint or Legal Notice ("Initial Information / Erstinformation").

  • If it says "gebundener Vertreter" (§ 34d Para. 7), you now know thanks to § 86 HGB: This advisor must represent the interests of the insurance company.

  • If it says "Versicherungsmakler" (§ 34d Para. 1), they are legally obliged to represent your interests.



At Karmartha, we work as Insurance Brokers. We use our independence to scan the market for you—free from sales quotas or corporate interests.




Sources & Further Links

For you as a client, this change has advantages and disadvantages:




Laws and Regulations


No Legal Advice: This article serves for general information regarding the professional profiles in insurance distribution. The content has been compiled with the utmost care and is based on the current legal situation (HGB, VVG, GewO). Nevertheless, legal frameworks may change.

Note on the Terminology "Fee" (Honorar): Insofar as the text refers to fee agreements by insurance brokers, we point out that legally this constitutes fee-based mediation or a service agreement. The designation "Insurance Consultant" (Versicherungsberater) is a protected legal term for license holders under § 34d Para. 2 of the Trade Regulation Act (GewO). Karmartha GmbH operates as an Insurance Broker (Versicherungsmakler) under § 34d Para. 1 GewO.

Individual Assessment: The presentation of advantages, disadvantages, and forms of distribution is generalized. Whether a net tariff is worthwhile in an individual case depends on the specific situation.



 
 
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