Insurance Broker vs. Carrier

From “policyholder” to “premiums” and “providers,” much of the jargon used in the insurance industry isn’t easy to keep straight. For those unfamiliar with the difference between an insurance broker and carrier, Mployer Advisor outlines the distinction below.

What Is an Insurance Broker?

An insurance broker is a licensed professional who helps businesses evaluate and select insurance policies. Unlike insurance agents, brokers do not work for a particular insurance company. Rather, they represent employers and work to help businesses find the best plans and coverage for their needs.

Some brokers work with individuals rather than companies. However, the type of broker an employer will work with deals primarily or exclusively with procuring insurance coverage for businesses. These brokers are often called business insurance brokers or commercial insurance brokers.

There are several types of commercial insurance brokers, such as health insurance brokers, property & casualty (P&C) insurance brokers, liability insurance brokers and more.

Insurance brokers assess the unique needs of a given employer, then work with insurance carriers to negotiate and select an array of coverage options. For this reason, employers who work with a broker often end up with more choices than those who shop online or purchase directly from an insurance provider.

As a result, employers are able to evaluate a variety of plans and policies that an insurance broker brings to the table. Employers can compare coverage, costs and more in order to select the best plans for their company and their employees.

An insurance broker typically gets paid by commission. Usually this commission is built into the premiums paid by policyholders every month. Thus, it’s not a separate payment, but included in the price of the policy purchased through the broker.

Learn more about broker commissions and fees or try our commission calculator to see if your insurance broker costs are competitive for your market.

Connect me with a broker

What Is an Insurance Carrier?

An insurance carrier is the company that actually provides the insurance policy. Also called an insurance provider or insurance company, a carrier offers one or more insurance products to individuals or groups, such as health insurance, property and casualty insurance, workers’ compensation and more.

In other words, a carrier is the company you pay premiums to. They underwrite your insurance policy and pay out for claims.

Examples of large insurance carriers include State Farm, Allstate, Humana, Cigna and Progressive.

Insurance carriers can offer policies for individuals, such as Geico’s car insurance or Liberty Mutual’s life insurance. However, carriers can also offer business insurance which covers a company or a group of employees. Examples include Blue Cross Blue Shield’s group health plans and Delta Dental’s group dental insurance. Looking for more exclusive content? Check out what’s trending on the Mployer Advisor blog.

‍