Glossary · Insurance agency commissions

Insurance agent vs. broker

An insurance agent sells and services policies on behalf of one or more carriers; a broker is described as acting for the customer. In practice both are usually paid commission by the carrier that writes the policy, and many states license both under a single producer license, so the label matters less on a commission statement than the contract does.

By Lapidar, the team building it · October 13, 2026 · Also called agent vs broker; insurance producer; broker vs agent

What it means

The NAIC’s glossary of insurance terms defines an agent as “an individual who sells, services, or negotiates insurance policies either on behalf of a company or independently,” and a broker as someone who works “on behalf of the customer” and is “not restricted to selling policies for a specific company, but commissions are paid by the company with which the sale was made.”

How it works: an agent’s authority comes from a carrier appointment or agency agreement, which can include the power to bind. A broker shops the market for the client and submits to carriers or wholesalers. Many states now issue a single producer license, and how the terms are used varies by state and by line.

How it shows on a commission statement

Either way, commission arrives from the carrier, or from a wholesaler or MGA when the placement went through one. Some brokers also charge the client a fee; that fee is separate and does not appear on the carrier’s statement. Reconcile carrier commission against the policies you placed, and track client fees in your own records.

Example

Same policy, two routes · EX-49207Example data

Premium: $8,000.00
Agent route: carrier commission at 12%: $960.00
Broker route via wholesaler: carrier commission at 15%: $1,200.00
Wholesaler’s share: −$400.00
Broker’s commission from wholesaler: $800.00

Example data. Rates and splits are invented; any separately disclosed client fee would sit outside the carrier statement. Routes are illustrative, not a comparison of typical earnings.

Commonly confused

Captive vs. independent is about how many carriers an agent represents; agent vs. broker is about whom the intermediary acts for. See captive vs. independent agent.
The agent of record is whoever the carrier pays on a policy, whatever the title. See agent of record.
A managing general agent acts for the carrier with delegated authority. See managing general agent.

Common mistakes to check

Assuming a broker is paid by the client, so there is no carrier commission to reconcile.
Mixing client fees into carrier commission totals.
Expecting the gross carrier rate on a placement that went through a wholesaler.

Questions

Is an insurance broker paid by the client or the carrier?

Usually by the carrier, through commission, as the NAIC glossary notes. Some brokers also charge a disclosed fee to the client, which is separate from commission.

Are agents and brokers licensed differently?

It depends on the state. Many states use a single producer license for both, while some, such as New York, still license agents and brokers separately. Check your state insurance department.

Sources

National Association of Insurance Commissioners, Glossary of Insurance Terms, entries for agent and broker. Retrieved October 13, 2026.

Lapidar is commission reconciliation software for independent insurance agencies, in its founding pilot. Related: commission calculator.