What is an insurance carrier? It’s a company that sells and fulfills insurance contracts. Whether you’re shopping for health coverage, renter’s, or life insurance, at some point you will be interacting with an insurance carrier. They’ll provide you with your policy and fulfill the contract when you make any claims.
In this guide, we’re going over the basics of what an insurance carrier is so you can shop for coverage with confidence. Let’s get started!
What Does Insurance Carrier Mean?
An insurance carrier is a company, like Geico, Allstate, or UnitedHealthcare, that offers insurance services.
Most of the larger insurance companies offer more than one type of insurance, or even sell them together in a package – think of how many commercials you’ve seen for bundled home, health, pet, and auto. Smaller or more specialized insurance carriers, on the other hand, may only specialize in one type of insurance.
Carriers provide a variety of policies that you can choose from to fit your particular needs. Once you’ve purchased one, every month, you’ll pay a premium, or monthly fee, to keep your contract with the insurance carrier active. When you need to file a claim – for example, after an ER visit, or to claim a benefit from a life insurance policy – the carrier will review it, process it, and pay it out once it’s approved.
Carrier, Company, Agency, Broker – What’s The Difference?
When it comes to insurance, there are a lot of terms to keep track of, and so many of them sound similar. What is an insurance carrier vs an insurance agency? What is a broker? Let’s answer those questions and review some of the common terms you might see while shopping for insurance:
Insurance carrier, insurance company, and insurance provider refer to the same thing and are interchangeable terms. This is the organization that will underwrite your policy and process your claims.
An insurance agency or agent is a company or individual that is state-licensed and authorized to sell a particular carrier’s insurance policies. The agency may be an extension of a larger insurance carrier, like a Geico agency, or they may be independent, selling policies from multiple carriers. Their obligation is to the insurance company, rather than you, the consumer.
A broker is an expert consultant who works for you, the insured, to get price quotes from various insurance companies. Brokers work with clients to define their needs before assisting them in shopping for a plan. They are not obligated to pitch a particular insurance company, and in many states are legally required to act in a client’s best interest. A broker may be helpful if you need assistance figuring out your exact insurance needs.
Admitted vs Non-Admitted Insurers
You might have seen a particular company referred to as an admitted or non-admitted carrier. Admitted carriers are state-backed, while non-admitted carriers aren’t. While there is a higher risk with non-admitted carriers, they aren’t necessarily a bad thing!
Admitted Insurance Carriers are backed by a state’s Department of Insurance.
They have been approved by a state’s DOI after meeting certain regulations set out by the NAIC, and must adhere to those standards to maintain admitted status.
If an admitted insurance carrier fails financially – for example, while you or a loved one are in the middle of a hospital stay – the state will step in and provide assistance in covering your claims.
If an insured person feels their claim was handled improperly, they can appeal to their state’s Department of Insurance.
Non-admitted Insurance Carriers are not approved by the state. This means:
They may not comply with insurance regulations.
If they go under, there’s no guarantee that your claims will be paid out, even if the claim is active when the company fails.
Any claims that you believe were handled improperly cannot be appealed at your state’s DOI.
That said, non-admitted insurance companies are still regulated. Their regulations tend to be less strict than the criteria admitted insurers must meet, though.
They often offer coverage for higher-risk scenarios, like policies for long-term care or for people who have many insurance claims and do not meet underwriting criteria.
Whether admitted or non-admitted, insurance carriers’ credit ratings are graded in the US on a letter scale of A++ to F. A lower rating means that an insurer is less financially reliable.
So a non-admitted insurance carrier with a high rating is likely reliable, but even an admitted carrier with a lower rating could be a risky bet – they may go under when you need to file a claim. Keep this in mind when you’re looking, and check out a company’s rating with AM Best before you buy.
To sum it up, the meaning of "insurance carrier" is the company that will provide your insurance coverage, underwriting your policy and processing and paying out your claims. While the carrier may not always be your main point of contact, it’s still important to understand what they are, and who you’re working with!
We hope you’ve left this guide with a better understanding of what an insurance carrier is, and can now more confidently get a policy that works for you.