Glossary
Agency bill vs direct bill
Agency bill and direct bill are the two ways premium gets collected on a policy. Under direct bill, the carrier invoices the insured directly and pays the agency its commission later, usually on a monthly statement. Under agency bill, the agency invoices the client, collects the premium, keeps its commission, and remits the net amount to the carrier or wholesaler.
Why the difference matters
Direct bill is less work. The carrier handles invoices, payment plans, and late notices, and the agency's job is reconciling the commission statement. Agency bill puts the agency in the billing business: invoicing, collecting, chasing late payers, and handling cancellations for nonpayment.
Agency bill also carries fiduciary weight. Premium the agency collects belongs to the carrier, and many states require it to sit in a separate premium trust account until it is remitted. Sloppy trust accounting is a license problem, not just a bookkeeping problem.
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.
Common questions
Which is better for an agency?
Direct bill means less admin work and fewer trust accounting obligations, which is why most agencies prefer it where it is offered. Agency bill is often the only option on surplus lines placements, and some agencies like the control it gives over the client billing relationship.
What is net premium on agency bill business?
Gross premium minus the agency's commission. The agency collects the gross amount from the client and remits the net amount to the carrier or wholesaler, keeping its commission at the point of collection.
Part of the Relay insurance operations glossary. Updated 2026-07-11. See how we source content.
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