Insurance agent broker producer

When I first started in the insurance industry, I was a bit confused by the terminology, especially some of the titles people seemed to use interchangeably. Carriers vs. insurers, licensing vs. compliance, or insurance agent vs. broker vs. producer.

Sometimes the answers are simple. Insurers and carriers are, in fact, the exact same thing. And the terms are completely interchangeable. But when it comes to agents, producers, and brokers, things are a bit more complex. Although these titles are used somewhat interchangeably (depending on the speaker or the situation) they do actually have some distinctions worth noting.

Insurance Agent

‘Insurance Agent’ is almost always what we, as consumers, use for individuals who sell insurance…and it’s definitely the most common. The distinguishing characteristic of an insurance agent is that they are representatives of insurance carriers. They are paid to sell insurance to consumers and become the link between the policyholder and the insurer. Insurance agents act on behalf of the insurance carrier and can bind coverage. Insurance agents must be licensed in their state and most have to be appointed, as well. Agents are paid by the insurance carrier.

Insurance Broker

‘Insurance Brokers’, on the other hand, are representatives of the insured. While they do still ‘sell’ insurance, their role is a bit different. Brokers investigate insurance options from a host of different insurance carriers and make recommendations based on their clients’ needs. The broker reviews insurance options with the client and once a policy is chosen, the broker alerts the insurance agent to bind the coverage.

The client, or policyholder, then sends a check for the policy amount and the broker commission to the insurance carrier. The carrier then receives the payment and pays the broker their commission from the client payment. The broker, therefore, is ultimately paid by the client.

Insurance Producer

‘Insurance Producer’ is a relatively new term adopted in 2005 by the NAIC (National Association of Insurance Commissioners). It isn’t used as much in the common vernacular, but is widely used within the industry itself. Producer encompasses both insurance agents and insurance brokers.

Anyone who sells, solicits, or negotiates insurance policies is required by state law to be licensed. Whether you are an agent who solicits and sells insurance policies, or a broker who investigates and negotiates policies with the client – you will need to be licensed to sell insurance. In fact, brokers and agents go through the same process and get the exact same license. So to simplify things, the term “producer licensing” is used when discussing requirements for who needs to have a license – brokers and agents.

While similar at first glance, insurance agents and brokers have different responsibilities and represent different parties. Both, however, fall under the umbrella of insurance producer, the industry’s term for those that sell, solicit or negotiate insurance.

Additional Industry Terms

While we’re here, it might be good to review a few of the other terms you might run across when you step foot into the wide world of insurance.

Captive Insurance Agent

Captive insurance agents sell policies for only one company. So Jake can only sell policies from State Farm and Flo can only offer you options from Progressive. Many large insurance carriers only utilize this type of agent. Captive agents are paid a salary as well as a commission for policies sold.

Selling for only one carrier allows these agents to become very knowledgeable about their policies which can be a great advantage for the consumer. On the flip side, your policy options are more limited since the agent can only present policies available through that one carrier.

Independent Insurance Agent

Independent insurance agents sell policies for multiple insurance companies and are paid a commission for policies sold. Consumers usually get more options to fit their budget and needs through an independent agent, but with so many policy options available, these agents may not be as knowledgeable about the ins and outs of every policy.


Insurance carrier appointments are a form of authorization from an insurance company giving a person the authority to act on its behalf as an agent. Agents must be appointed by at least one insurance company in addition to being licensed by their state. It’s the industry’s way of saying “yes, this person is legally able to sell you these insurance policies and the companies will abide by them.”

Have questions? We’d love to hear from you!