Many terms make an appearance when purchasing insurance coverage for a law firm. Sorting through the jargon and trying to understand the intricacies of insurance can quickly become a headache and leave buyers with several questions:
It can become even more frustrating when unsure who your insurance company is. Many people need clarification on the insurance agency and carrier (or company). Lawyers often use the terms insurance agency and insurance carrier interchangeably. However, they are, in fact, two different things.
Insurance agencies and insurance carriers play different roles within the industry, and it is vital to know the differences between the two and how they affect your journey to securing and maintaining insurance coverage.
What is the difference between an insurance carrier vs an agency, and what implications does each have when choosing coverage?
In a nutshell:
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The insurance carrier is simply the company behind a portfolio of policies. Brands like Aetna, Progressive, and State Farm are all insurance carriers. Clients may not interact with insurance companies much, certainly not more than an agent, but it is advisable to become familiar with your carrier and their policy offerings.
The insurance carrier provides the actual product—individual insurance policies. It is responsible for underwriting or establishing the underwriting criteria. The insurance company is responsible for receiving and paying out claims.
For those reasons, choosing a carrier with a strong policy and a sound financial rating is essential. Information about the carrier’s financials and ability to pay claims can be found on various rating websites, including AM Best.
Understandably, most lawyers are more familiar with their insurance agency (and specific agents) than their insurance carrier. Insurance agencies are typically responsible for most day-to-day interactions with the people they cover. Agencies and their agents write new business clients and maintain an insurance company’s renewal book.
In addition, they are the first point of contact for customer service-related matters, questions about the policy, binding coverage, and more. Agencies are not responsible for handling claims directly. Insureds typically report claims to their agent first, who may then convey the information to the claims department.
Agencies act as a “middleman” between customers and the insurance company.
Some agencies represent only one carrier (aka captive or exclusive agencies), while others represent more than one (aka independent agencies). Likewise, specific agencies may have different availability of other insurance products, such as employment practices liability insurance, workers' compensation, cyber liability, etc.
We at Protexure Insurance are an agency. We offer professional liability coverage through several insurance carriers for accountants and lawyers. We also provide options for various products, such as cyber liability and Business Owners' Policies.
We at Protexure Insurance are an agency. We offer professional liability coverage through several insurance carriers for accountants and lawyers. We also provide options for various products, such as cyber liability and Business Owners' Policies.
Insurance agents, particularly those who specialize in malpractice insurance, are very knowledgeable about the marketplace and will be able to get the appropriate coverage for law firms.
Researching every carrier and its policies is time-consuming, and agents are there to help. Agencies highlight the advantages and disadvantages of one carrier over another based on your specific needs.
When considering which agency to work with, some critical questions to ask are:
Overall, it is crucial to establish trust between you and your agency and be satisfied that they offer your firm the best options.
| Agencies | Carriers | |
| Representation | Represents the best interests of insurance customers. | Represent their company and products. |
| Offerings | Agencies can be independent and select between multiple carriers to choose policies based on customer needs, or they can be “captive” agents representing a single carrier. |
Policies come from the company’s portfolio only. |
| Roles | The liaison between carriers and insureds. | Creates policies, underwrites, and manages claims. |
| Customer Experience | Personalized, consultative experience allows for greater choice in policies and products. | A more streamlined approach that cuts out the “middle man” of agencies. |
It is urgent to understand the distinction between an insurance agency and an insurance carrier and what functions both have. When purchasing coverage for a law firm, the most important thing to consider is how well the insurance carrier suits your firm’s unique needs and whether they are reputable. Other factors, such as malpractice insurance cost, limits of liability, and areas of practice, also play an essential role in choosing an insurance provider.
Finding the right policy and price may be challenging, but with an experienced agency, you can confidently select appropriate coverage for your firm.
Need help deciding on coverage?
Protexure, a McGowan company, has decades of experience helping our lawyer clients get the most from their insurance coverage. Get in touch with a Protexure expert who can help you make an informed choice.