{"id":1667,"date":"2020-10-13T14:42:18","date_gmt":"2020-10-13T14:42:18","guid":{"rendered":"https:\/\/www.insurancebee.com\/blog\/?p=1667"},"modified":"2024-05-31T15:20:32","modified_gmt":"2024-05-31T15:20:32","slug":"difference-insurance-agency-and-insurance-carrier","status":"publish","type":"post","link":"https:\/\/www.insurancebee.com\/blog\/difference-insurance-agency-and-insurance-carrier","title":{"rendered":"What\u2019s the difference between an insurance agency and an insurance carrier?"},"content":{"rendered":"
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\"difference<\/figure>\n<\/div>\n\n\n


There is one, straight-forward difference.<\/p>\n\n\n\n


An insurance carrier creates the product (the insurance policy). An insurance agency sells it.<\/p>\n\n\n\n

Insurance carrier, insurance agency \u2013 what\u2019s the difference? When you\u2019re trying to buy insurance, it can seem confusing.<\/p>\n\n\n\n


It might help to think of it like this: the insurance carrier is the manufacturer. The insurance agency is the retail store.<\/p>\n\n\n\n


But there are a few more differences you should know about.<\/p>\n\n\n\n

<\/p>\n\n\n\n

What\u2019s an insurance carrier?<\/h2>\n\n\n\n


Also known as an insurance company, or insurer, an insurance carrier:<\/p>\n\n\n\n


\u2022 Creates insurance policies.
\u2022 Decides what the policy will cover (and what it won\u2019t).
\u2022 Sets the limit on how much will be paid out if there\u2019s a claim.
\u2022 Takes on responsibility for the policyholder\u2019s risk.
\u2022 Pays claims.<\/p>\n\n\n\n


An insurance carrier can only offer the policies it creates. And is strictly regulated by the government — to make sure they have the funds to cover the risk they take on.<\/p>\n\n\n\n

<\/p>\n\n\n\n

What\u2019s an insurance agency?<\/h2>\n\n\n\n


Also known as an insurance agent, an insurance agency sells and services policies created by insurance carriers.<\/p>\n\n\n\n


To do this, insurance agencies have to get appointed by an insurance carrier. This \u2018appointment\u2019 is basically a contract. It lays out which policies the agency can sell, and the amount the carrier will pay them for each policy sold.<\/p>\n\n\n\n


Insurance agencies vary in size. Anything from an operation owned and run by a single individual, to a large company with many employees.
<\/p>\n\n\n\n

But whatever their size: all insurance agents must have a state license<\/a> to sell policies.<\/p>\n\n\n\n


There are two kinds of insurance agencies.
<\/p>\n\n\n\n

\u2022 Captive\/exclusive agencies <\/strong>— sell policies only for one insurance carrier.
\u2022 Independent agencies<\/strong> \u2013 sell policies for multiple insurance carriers.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Captive\/exclusive insurance agents:<\/strong><\/h3>\n\n\n\n

<\/p>\n\n\n\n

\u2022 Work for one carrier only.
\u2022 Can only offer customers policies provided by that carrier.
\u2022 Get support from their carrier office, admin staff and customer referrals).
\u2022 Earn commission, salary + commission, or salary + commission + bonus.
\u2022 Know their carrier\u2019s insurance products inside-out.
\u2022 May have to meet certain sales targets, or push particular policies, for their carrier.<\/p>\n\n\n\n

<\/p>\n\n\n\n

Independent insurance agents:<\/strong><\/h3>\n\n\n\n

<\/p>\n\n\n\n