What is the difference between an insurance agency and an insurance carrier?

An insurance agency is an office or a group of people known as (insurance agents), work with the public to provide them with insurance coverage from several options (insurance carriers), such as auto insurance , health insurance companies. 

An insurance carrier is a company that sell insurance, it design its own policy and coverage. Usually the mother company does not work directly with the public, but through (insurance agency). 

The quick answer is that the agency is the sales force for the insurance company, while the insurance company is the entity that backs the promise that the insurance policy provides.  Like many other industries the past several years, the lines between Companies and Agents have become more blurred, as direct insurance sales have become more widespread (via phone, internet, etc.).  Many companies have added (or have even began as) direct distributors of their own insurance company.  Geico and Progressive have done an exceptional job of this, and several other small companies (as well as the larger companies like Allstate and State Farm) have increased their footprint in the direct distribution channel as well.

There are several different entities in the insurance marketplace.  Let's walk through them from the bottom-up.Independent Insurance AgentIndependent insurance agencies are offices that sell a service to the general public.  A client searching for car insurance walks into an agency off the street and wants to purchase a policy.  An agency sales rep will take down their information and price them a policy with several different insurance carriers.  They facilitate the application process, advise the client on coverage questions, and help the client with the claims process should they be involved in an accident.  Sometimes they handle customer service and policy endorsements for their customers, while other times the carrier handles that directly.  They do not get to keep the policy premium that the insured pays, but rather are paid a commission by insurance companies for policies they sell (normally around 10-15% of the premium).  Some agencies charge an additional "broker's fee" for their services.AIS - Auto Insurance Specialists is a good example of an independent agency.Captive Insurance AgentA captive insurance agent provides the same services as an independent agent, except they are contracted to sell through a single carrier rather than multiple carriers.  Farmers, Allstate, and State Farm agents are mostly captive agents.  These agents often have their businesses launched by a carrier, have all of their expenses paid by the carrier for a few years until they become profitable, then allowed to function on their own.  These agents often have secondary carriers, but the primary carrier has "first right of refusal" on any risks that they wish to insure.  If the primary carrier rejects the risk, then the captive agent may place the risk with a secondary carrier instead.  These agents also are paid on commission, and often have strict restrictions on the fees that they may charge.Your local Farmers agent is a good example of a captive agency.Managing General AgentIf it were up to the insurance carrier, they would simply collect premiums and cut claims checks.  Customer service, claims service, policy processing, billing, etc. are all additional services that add overhead to a company that they often don't want to have to take care of.  That's where a MGA comes in.  They act as an intermediary between the insured/agent and the carrier.  They take applications, underwrite risks, mail policies and bills, process endorsements, field customer service calls, and handle claims processing.  All the premiums they collect are forwarded to the insurance carrier, and all the claims are paid by the insurance carrier.  Everything else is done by the MGA.  MGAs often represent several insurance carriers, and are paid a commission for each policy sold through the program by the respective carriers they represent.Robert Moreno Insurance Services is a MGA.Insurance Carrier/CompanyThese companies are the ones that provide the insurance coverage.  They are responsible for coming up with the insurance programs that they sell.  They file the rates with the state department of insurance, collect premiums, pay claims, etc.  If not represented by a MGA, they also handle everything that a MGA does as well.  Insurance carriers can either sell their products through direct agents (salaried sales representatives that work directly for the carrier), through independent agencies, through captive agencies, or through a combination of the three.

Many Thanks  for your kind invitation , I am  familiar to a large extent to the term insurance agency unlike the term insurance carrier as it seems to be is not a common job or practice in the insurance market , However , I have got a bet of information from the participants answers and feel that they are useful.

Kind regards. 

Thanks for invitation ,I agree with all answers.

Insurance is a regulated industry, carriers' rates are submitted and approved by the state's insurance dept. Individual agencies cannot change a carrier's rates. So here how it works:

1. Agency submits customer info into quote, based on that information, the carrier will respond with an estimated premium. This is all usually done online now.

2. If the customer agrees with the quote, than a new business application is submitted to the carrier for issuance.

3. If the agency has "binding authority" (P+C), than the policy can have temporary coverage before the carrier has formally issued it.

4. The carrier reviews the information for accuracy and issues the policy to the customer.

It works the same no matter how many carriers the agency may have.

Agree with the expert answer given by Mr. Vinod Jetey. Thank you 

Thanks

Agree with given answers

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 Thank you for inviting ......... agree with answer vinod Jetley

agree with all expert answers above