Which statement is true regarding insurance brokers?

Insurance brokers are required to be licensed in the state where they conduct their business. This licensing ensures that they have met the requisite educational and professional standards, demonstrating their knowledge of insurance products, regulations, and ethical practices essential to serving clients effectively. The licensing process often involves testing on both the specifics of insurance practices as well as the laws governing insurance in that state, which helps to protect consumers.

In contrast, the other statements imply misunderstandings about the role of brokers. Brokers do not solely represent insurance companies; instead, they act on behalf of the clients looking for insurance solutions suitable for their needs. Additionally, brokers indeed must be licensed to operate legally, ensuring compliance with state requirements that oversee the industry’s standard practices. Lastly, unlike agents who represent an insurer and act under its authority, brokers work independently to find the best options for their clients, making them distinct in their function.