Consumers often use “agent” and “broker” interchangeably, but the roles can be legally different. The distinction becomes especially important for commercial insurance, specialty placements and service-fee arrangements.
New York’s Department of Financial Services explains that agents are licensed representatives of insurance companies. They may represent one insurer or several. Brokers are licensed representatives who work with multiple carriers and are generally construed to represent the buyer.
Captive agent vs. independent agent
A captive agent primarily represents one insurer or insurance group. An independent agent can represent multiple insurers and may compare products from the carriers with which the agency has appointments. That is still different from having access to every insurer in the market.
What an insurance broker does
A broker typically begins with the buyer’s risk and seeks suitable coverage from available markets. In complex commercial placements, a retail broker may also work with a wholesale broker or surplus lines specialist to access insurers not available directly to the retail client.
| Question | Agent | Broker |
|---|---|---|
| Who is typically represented? | Insurer(s) | Insurance buyer |
| Can multiple carriers be available? | Yes, for independent agents | Often, depending on market relationships |
| Can compensation include commission? | Yes | Yes |
| Can the role vary by transaction? | Yes, depending on licensing and appointment | Yes, depending on state law and placement |
How are agents and brokers paid?
Commission from insurers is common. Some jurisdictions and transactions also permit disclosed fees under specific conditions. Buyers should ask how the intermediary is compensated, whether fees apply and whether additional commissions or incentives may exist.
Does a broker search the entire market?
Not necessarily. No intermediary has automatic access to every insurance company. Market access depends on appointments, broker agreements, wholesalers, specialty relationships and insurer distribution strategies. Asking which carriers were approached can be useful for a commercial buyer.
Questions to ask before choosing an intermediary
- Are you acting as agent, broker or both for this transaction?
- Which insurers or specialty markets can you access?
- How are you compensated?
- Do you specialize in my industry or risk type?
- Who will handle claims advocacy and renewals?
- Can you explain major exclusions, not only premiums?
- Are there service fees in addition to commission?
What matters more than the title
Licensing status, expertise, insurer access, service quality and clarity about whom the intermediary represents are often more important than the label on a business card. A strong intermediary should be able to explain the placement, alternatives and important gaps in plain language.
Frequently asked questions
Is an independent agent the same as a broker?
Not necessarily. An independent agent can represent several insurers, while a broker typically represents the insurance buyer. State law controls the precise distinction.
Can a broker charge a fee?
In some states and circumstances, yes, subject to disclosure and legal requirements.
Who should a business use?
That depends on risk complexity, needed markets and expertise. The important question is whether the intermediary can access suitable insurers and explain the placement clearly.
Sources & further reading
Reviewed against New York DFS guidance in September 2026. Licensing terminology and fiduciary or disclosure duties vary by state.
