Agency bill vs direct bill

Why the difference matters

With direct bill, the carrier manages the billing schedule, but the agency still helps clients understand notices, payment status, and possible coverage consequences. With agency bill, the agency also handles collection and remittance under its agreement. The extra responsibilities affect staffing, cash flow, and the accounting workflow.

Handling premium creates responsibilities that depend on state requirements and the agency agreement. Confirm how funds must be held, when they must be remitted, and who reconciles them. Keep premium collected for others distinct from the agency's earned revenue in your accounting process.

Where you see each one

Direct bill dominates personal lines and most standard commercial business. Agency bill shows up heavily in surplus lines and E&S placements, where a wholesale broker or MGA bills the agency and the agency bills the client.

The vocabulary follows the money. Gross premium is what the client pays. Net premium is gross minus the agency's commission, and it is the amount the agency remits upstream on agency bill business.

A useful reconciliation checkpoint

For an agency-billed placement, match the client invoice, collected amount, commission, fees, and upstream remittance. Confirm the due date and open balance. A difference between gross and net is expected; an unexplained difference is the item to investigate.