30 Dec

Insurance Agents and The Difference Between Captive and Independent Agents

These days, most of us are busier than ever, and with a wide array of products and services out there, the convenience of one-stop shopping cannot be understated. That is why we often see people come in who have all their bank accounts, loans, and mortgages with only one company—often one that they have dealt with for years on end. To keep them in-house, the company will offer a better rate or other incentives to prevent clients from shopping around or doing business with multiple vendors. Many times people can save a lot by doing a little research and discovering what else is out there. The same goes with insurance. Like banking, it is often worthwhile to take a look at what someone else might offer, and that is where an independent insurance agent comes in.

Types

Whether it is home insurance, car insurance, commercial insurance or any other type of insurance product, when it comes time to purchase or renew an insurance policy or a range of policies there are two distinct types of insurance agents that a person may deal with. The first is what is known as a captive agent. These are the agents that work for one specific company, and only that company. The other type is an independent insurance agent. Also known as an insurance broker, these agents work with (not for) a wide range of insurance companies. While they may seem the same as captive agents, as they both sell insurance, there are many differences between the two.

Captive Insurance Agents

When a customer deals with a captive insurance agent, that agent is often well versed and fluent on the products and services that their company offers.  This means that when it comes to those few products they can be considered experts, but there are a few downsides. This article is a great starting point when it comes to choosing which type of agent to go with, and as it explains, captive agents may not be able to offer the best product for a customer’s individual needs. Limited by their contracts with their parent company, there are often specific quotas to meet and incentives to sell specific products, and clients may find themselves either purchasing the wrong coverage or pressured to purchase too much coverage. That is why if a person wants to go with only one company and not a broker, it is best to shop around at various companies before making a final decision.

Independent Insurance Agents

Unlike captive agents though, an independent insurance agent is not contractually obligated to sell one specific insurance company’s products, and this is a good thing. Insurance is a competitive industry, and the best work by recommending the right insurance products for their client’s individual needs. They research and learn which insurance companies are the most financially stable, and which products offered are best suited for the client and at what cost. They can offer their clients a choice of a wide range of insurance products that suit their needs. This gives clients the opportunity to have insurance companies compete for their business.

These are the primary differences between independent and captive insurance agents. An independent agent works for their clients, whereas a captive agent works for the insurance company. While there is the potential to get great customer service, captive agents are limited by their contract and required to promote specific products. It is the independent agent’s ability to discover the right insurance products at the right price for their client’s individual needs. It is about more than knowing the fine print of the insurance policy, it is about being able to understand the client and anticipate their needs.

While we all enjoy the convenience of one-stop shopping, it is important not to have all our eggs in one basket. Shopping around and researching what is out there can be the best way to prevent upsetting the applecart. The great thing about an independent insurance agent, or insurance broker, is that they are your one-stop shop. They review all the available products for you and help you choose which will best suit your needs. Who said shopping around had to be difficult, or like a chore?