An insurance agency, sometimes called an insurance brokerage or independent agency, solicits, writes and binds policies through many different insurance companies. They are not directly employed by any one insurance carrier. An example would be Smart Move Insurance, this is an independent insurance agency in Scottsdale, AZ that employs insurance agents or brokers to sell products off different insurance companies that they are appointed with. A Smart Move Insurance agent doesn’t work for any individual insurance carrier, unlike a State Farm, Farmers, or American Family agent that is employed by those companies to only offer their products. These agents are often called captive agents. Agencies can decided which insurance carriers they would like to represent and which personal and business products they would like to offer. This allows their clients to find them the best coverage and price that is available.
An insurance carrier such as; Travelers, Metlife, State Farm, Safeco, are where the company actual creates and manages the insurance products that they would like to sell. They control the underwriting, claims, pricing, and the overall guidance of the company. Let’s look at an example for each of these. If you were to buy an Ipad from Wal-Mart, then Wal-Mart would be the insurance agency and Apple would be the insurance carrier. Thus, Apple manufactures and creates the Ipad and Wal-Mart is where you buy them from but they also offer many other similar products to the Ipad.
Reposted from Quora: http://www.quora.com/Insurance-Agencies/What-is-the-difference-between-an-insurance-agency-and-an-insurance-carrier