Buying Direct from Carriers: Pros, Cons and When It’s the Right Choice for Your Business

Updated: January 24, 2026
Author: Senior Procurement & Commercial Insurance Analyst (U.S. market)

Buying insurance directly from carriers (insurers) is an increasingly visible distribution path in the U.S. marketplace—but it’s not a one-size-fits-all solution for businesses. This ultimate guide digs deep into the mechanics, advantages, downsides, procurement tradeoffs, legal and operational risks, and practical decision frameworks so procurement, risk, and finance teams can determine when direct-buying is the right choice.

Table of contents

Quick summary: who should read this
What “buying direct from carriers” actually means
The pros — why businesses choose direct
The cons — where direct buying creates risk or hidden costs
When direct is the right choice: decision criteria and use cases
How to evaluate a carrier directly: checklist and due diligence
Pricing, commissions and total cost of procurement
Contracts, binding authority, and legal traps to avoid
Operational model comparisons (Broker vs Agent vs Marketplace vs Direct) — table
Procurement playbooks: RFP vs direct negotiation, templates and KPIs
Real-world examples and decision scenarios
Implementation checklist: step-by-step to buy direct safely
Further reading and internal resources

Table of Contents

Quick summary: who should read this

Procurement managers running insurance for mid-sized to large U.S. firms who need to evaluate distribution channels.
Risk managers and CFOs weighing cost, service and claims outcomes.
Operations leaders in fleet, construction, tech, or other verticals deciding whether to remove broker intermediation.

This guide assumes commercial lines (general liability, commercial auto, workers’ comp, professional liability, property, cyber and specialty lines) and U.S. regulatory & market realities.

What “buying direct from carriers” actually means

Buying direct means the insured purchases coverage and binds a policy with the insurance company itself (carrier), rather than working through an independent or captive agent, broker, Managing General Agent (MGA), or an online marketplace/aggregator that sources multiple carriers.

Variants of “direct” include:

Direct-to-consumer (D2C) portals run by large carriers (online quote + bind).
Dedicated direct-account teams for large commercial accounts (insurer has its own sales/underwriting team).
Direct-binding MGAs or program administrators that act with underwriting authority on the carrier’s behalf (functionally direct for the buyer, though legal relationships differ).

Important distribution context: despite rapid digital growth, independent agents and brokers still place a dominant share of commercial lines business in the U.S., particularly for complex commercial risks. For example, independent agencies placed the large majority of commercial-lines premiums in recent market-share reports. (insurancejournal.com)

The pros — why businesses choose to buy direct

Lower explicit distribution cost (sometimes)
- Carriers selling direct typically avoid paying broker commissions or agent fees, which can reduce the headline premium. For straightforward, commodity risks the savings can be meaningful—especially for high-volume or standardized lines.
Faster quoting & binding for standardized risks
- D2C portals and carrier-run platforms can produce immediate quotes and bind coverage within minutes for routine risks, which helps operations teams that need fast proof-of-insurance to meet contracts or regulatory checks.
Potentially better control over policy wording (for large accounts)
- With a direct underwriting relationship, larger buyers may negotiate endorsement language, program constructs, and direct claims escalation paths with the insurer.
Consolidation benefits and product bundling
- Some carriers offer integrated programs (property + auto + cyber bundles) with preferred pricing or policy features that are only available when business is placed directly.
Data & analytics integration
- Direct relationships can allow streamlined data feeds and telematics/cyber risk telemetry directly into the carrier’s platform, which may enable dynamic pricing, loss-control credits, or tailored risk engineering services.
Eliminates intermediary conflict for some buyers
- In scenarios where broker compensation models create perceived conflicts (commissions, contingent contingent commissions, or opaque fee structures), buying direct reduces intermediary layers.

When those pros matter most:

Standardized mid-market and small accounts with repeatable risk profiles.
Large buyers with negotiating leverage and appetite to manage underwriting/claims relationships in-house.
Firms that prioritize speed and automation over broad marketplace comparison.

The cons — where buying direct can create risk or hidden costs

Reduced market leverage and fewer comparative options
- Carriers sell only their products: no guaranteed cross-carrier competition. You may miss better pricing, broader coverage or more favorable exclusions available through competitive bidding across brokers/marketplaces.
Potentially worse outcomes on complex or specialty risks
- Complex exposures (construction wrap-ups, large fleet programs, high-frequency professional liability, primary+excess towers) often require broker advocacy, carrier appetite mapping, and creative program structures—services direct-buy may not match.
Hidden total cost of ownership
- Savings from commission avoidance can be offset by less favorable terms, higher deductibles, narrower sublimits, or lack of value-added services (e.g., claims advocacy, legal placement support, forensic accounting).
Claims handling & escalation limitations
- Brokers often provide active claims advocacy and independent oversight; a direct relationship can make escalation and dispute resolution more political (client vs. carrier).
Governance, compliance and procurement limitations
- For many large organizations, procurement policies, RFPs and audit trails assume brokered placements. Moving direct can trigger procurement committee questions, captive accounting changes, or legal review.
E&O exposure if internal procurement/placing is poorly executed
- Incorrectly interpreted policy language, undocumented endorsements, or misunderstood exclusions lead to uncovered losses and internal liability.

When buying direct is the RIGHT choice — decision criteria and use cases

Use this decision framework to assess whether direct-buy suits your business.

Primary criteria (score each 0–2; higher = more favorable for direct):

Risk complexity: low complexity (2) → ideal for direct; complex programs (0) → prefer brokers.
Market comparability: many commodity carriers exist (2) vs highly specialized markets only reachable via broking (0).
Internal capacity: strong internal insurance/procurement team (2) vs limited bandwidth (0).
Volume & leverage: high premium/strategic importance (2) — you can negotiate direct deals; low spend (0) — less leverage.
Timeliness needs: urgent binds & automated processes needed (2).
Desire for transparency on fees: high (2).

Aggregate score guide:

10–12: Strong candidate to buy direct
6–9: Hybrid approach — use direct for routine lines, broker for specialty
0–5: Broker/marketplace-led procurement recommended

Common use cases where direct often wins

Standardized commercial auto fleets with telematics-enabled pricing and simple limits.
Small business package policies for franchises or retail stores where carriers have strong D2C platforms.
Large enterprise programs where the carrier is the incumbent and offers bespoke contract terms and integrated risk engineering.
Situations where speed and immediate proof of insurance are required (vendor onboarding, last-minute contract requirements).

When NOT to buy direct

You need access to surplus lines or specialized markets (surplus placements historically increased and often require brokers).
You require multi-carrier towers, layered programs, or complex reinsurance/retro arrangements.
You want third-party advocacy in claim disputes or complex claim investigations.

Note: Market data shows independent agents still place the bulk of commercial-lines premiums—meaning brokers remain critical for most commercial insurance placements. This distribution reality matters for access to markets and negotiated terms. (insurancejournal.com)

How to evaluate a carrier directly — due diligence checklist

Before buying direct, run the following checks. Use a red/amber/green rating system.

Financial strength & stability
- AM Best rating, S&P, Moody’s, latest statutory surplus and loss ratio trends.
- Red flag: ratings below A- or deteriorating surplus.
Coverage wordings & endorsements
- Obtain policy forms, CG, CP, and endorsements. Confirm whether key protections appear (additional insured language, primary/non-contributory, waiver of subrogation, cyber incident response).
Claims handling and service standards
- SLA for claims acknowledgement, assigned adjuster response times, catastrophic response plan, third-party vendor panels.
Appetite & capacity for renewals
- Underwriting appetite over time, appetite for higher limits or deductibles.
Program flexibility & endorsements negotiation
- Will the carrier negotiate sample contract wording, endorsements, or performance bonds?
Binding authority & turnaround time
- Direct binding limits, underwriting review thresholds and turnaround SLA.
Data & integration capabilities
- Portal APIs, certificate issuance time, telemetry support.
Loss control & risk engineering services
- Onsite inspections, training, post-loss remediation budgets.
Legal & regulatory compliance
- Licenses in your operating states, admitted vs non-admitted status (surplus lines).
Price transparency & fee structure

Are there policy fees, policy-issue charges, or premium finance arrangements that change the total cost?

References & client testimonials

Request client contacts in similar industries to validate performance.

Contractual rights and dispute resolution

Arbitration, forum selection, or right to independent appraisal.

Use this checklist to build scorecards to compare carriers directly and also to compare carriers vs broker-provided options.

Pricing, commissions and total cost

A common driver for buying direct is to remove broker commissions. However, commissions and placement fees are only one part of the total cost equation.

Key budget elements to include in your TCO (total cost of ownership):

Gross premium (base rate x exposure)
Commissions/fees (if brokered) or carrier policy fees (if direct)
Deductibles and self-insured retention (impact on cash flow)
Sublimits & endorsements that shift cost to the insured
Loss control credits and retrospective pricing adjustments
Claims handling quality and potential loss amplification (A poorer claims outcome can dwarf commission savings)
Administrative costs to your team (time to manage carriers, issue certificates, etc.)

Industry commission context (U.S. commercial lines):

Average commission rates vary by line; a recent industry report cited average commission rates around the low-to-mid teens percent for many lines, but this varies by state and line. Use commissions as one factor—not the sole driver—when comparing direct vs brokered placement. (insurancejournal.com)

Practical tip: build a 3–5 year cash-flow projection including expected loss pick, deductible funding, and claims handling sensitivity to see whether direct savings hold up over time.

Contracts, binding authority, and legal traps to avoid

Understanding binding authority and the legal relationship between the buyer, the carrier, and any intermediary is critical.

What is binding authority?

Binding authority allows an agent or MGA to commit a carrier to a policy without referring individual risks back to the carrier underwriter. This can speed placement but it also concentrates underwriting risk in the intermediary. If you buy through an MGA or broker that holds binding authority, you are still often dealing with the carrier indirectly—but operationally it behaves like direct placement. (insuranceopedia.com)

Legal traps and mitigation

Unclear endorsements: Insist on receiving the full policy wording and executed endorsements prior to relying on coverage (not just a one-line certificate).
Certificate limitations: Certificates prove insurance presence but don’t replace the policy. Always review policy form wording for critical terms (additional insured language, primary/noncontributory).
Admitted vs non-admitted status: For multi-state operations confirm licensing and whether coverage is placed admitted (guaranteed by state guaranty funds) or surplus lines (no guaranty fund protection).
Late-notice exclusions & retroactive dates: Watch for retroactive date clauses (E&O or professional lines) and late-notice exclusions that can void coverage.
Claims cooperation clauses: Some policies include cooperation clauses that may require the insured to participate in claim defense. Understand obligations and potential control limitations.
Renewal automaticity: Clarify whether renewals are automatic, subject to premium changes, or require affirmative acceptance.

Always involve legal counsel for master program contracts, captives, and large direct placements.

Operational model comparisons: Broker vs Agent vs Marketplace vs Direct

Below is a comparison table summarizing key tradeoffs across distribution routes.

Dimension	Broker (independent)	Agent (captive/exclusive)	Marketplace / Aggregator	Direct (carrier)
Market access	Very broad; shops many carriers	Limited to one carrier’s products	Varies; good for price discovery	Only carrier’s own products
Best for	Complex, layered, specialty programs	Single-carrier affinity programs	Speed and comparison shopping for commoditized risks	Standardized risks or bespoke direct deals
Pricing transparency	Moderate — negotiation possible	Low (single product)	High for headlines (may hide fees)	High (no broker commission) but may include fees
Claims advocacy	Strong (independent advocate)	Moderate	Low	Low (carrier handles claims)
Speed to bind	Moderate	Fast	Fast	Fastest for standardized risks
Negotiation of terms	Strong	Low–moderate	Low	Moderate for large accounts
Binding authority	Dependent on broker agreements	Agent may bind	Depends	Carrier binds directly
Regulatory complexity	Broker helps navigate	Simplified	Platform-specific	Carrier manages licensing

Use this table as a guide—not a replacement for a structured RFP or quantitative scoring exercise.

Procurement playbooks: RFP vs direct negotiation, templates and KPIs

When to run an RFP

Use an RFP when you need true market testing (multi-carrier towers, complex exposures, high-dollar limits) or when procurement policy requires competitive bids.

When to negotiate direct

Use direct negotiation for renewals where your carrier is incumbent and has demonstrated value, or for straightforward commodity exposures with standardized forms.

Key RFP sections/requirements (short checklist)

Organizational overview and exposures (historical loss runs: 5 years)
Required limits, deductibles, and policy terms (mandatory endorsements)
Claim reporting & service level expectations
Pricing model requested (rate per exposure, actuarial basis)
Insurer financial strength minimum
Implementation timeline & certificate issuance requirements
KPIs: time to quote, time to bind, certificate turnaround, claims acknowledgement SLA, dispute resolution time

KPIs to evaluate brokers/carriers (for ongoing relationships)

Quote turnaround: business days to provide formal quote
Bind time: days from acceptance to policy issuance
Certificate turnaround: hours/days for standard certs
Claims SLA: time to assign adjuster and initial contact
Recovery ratio & subrogation realization (for claims handled)
Loss ratio vs market benchmark

For RFP templates, evaluation scoring and account-level KPIs, see internal procurement resources and templates like:

How to Run an RFP for Commercial Insurance: Templates and Questions for Large Accounts
RFP Template for Fleet or High-Exposure Accounts: Requirements, KPIs and Evaluation Scoring (useful when you must compare direct vs brokered towers)

Real-world examples and decision scenarios

Scenario A — Mid-market retail chain (20 locations)

Need: GL, BOP, commercial auto for delivery fleet.
Constraint: Must onboard new stores quickly with certificates of insurance.
Decision: Direct placement for BOP and auto with a carrier that provides instant certificates via API; brokered placement for excess liability where market competition matters.
Rationale: Speed and integration matter for routine lines; broker advice needed for higher-limit towers.

Scenario B — National construction contractor ($150M revenue)

Need: Wrap-up, builders risk, high-limits GL, OCIP/CCIP planning.
Decision: Broker-led procurement and placement.
Rationale: Complex program design, multiple carriers, subcontractor handling, contractually-required endorsements—broker access to specialized markets and program placement is critical.

Scenario C — Large tech firm (global)

Need: Cyber, D&O, E&O, umbrella.
Decision: Direct for cyber with incumbent carrier offering cyber risk engineering and telemetry integration; broker for D&O towers and international placements.
Rationale: Cyber benefit from direct telemetry data feed; D&O and international exposures require broker’s global placement network.

Implementation checklist: step-by-step to buy direct safely

Internal approval and policy exception documentation (procurement + legal sign-off).
Carrier shortlist (scorecards using the due diligence checklist above).
Request full policy forms and endorsements, not just summary quotes.
Obtain loss runs and ask the carrier for claims handling metrics and references.
Negotiate critical endorsements in writing (AI wording, waiver of subrogation, primary/non-contributory).
Confirm admitted status and licensing for all states of operation.
Obtain sample certificate issuance timeline and test API/certificate automation.
Arrange a pre-renewal review cadence and a formal escalation path for claims.
Build a contingency (broker or MGA) access plan—if the direct placement fails, you need rapid alternative market access.
Post-placement audit within 60–120 days to validate policy issuance versus quote and confirm endorsements.

Final recommendations — decision checklist (quick)

Keep brokers for: complex programs, surplus/specialty markets, multi-carrier towers, and when independent advocacy matters.
Consider direct for: standardized lines, when you have strong internal procurement capacity and the carrier offers demonstrable service/value additions.
Use hybrid models: direct for commodity lines + broker for specialty lines is a common, pragmatic approach.
Always size the decision to total cost, not just premium: include claims, service, and operational costs.