captive agent vs independent agentcaptive agent vs independent agent

Both come with significant benefitsand pitfallsdepending on how you prefer to work, the types of insurance products you can sell, and how you earn your income. The obvious downside of a captive agent is that he or she can only sell you products from one company. But you might find an independent agency very alien if youre used to being a part of a team. Instead, insurance carriers pay a commission for each policy an independent agent sells. It will help to know what each agent type offers, so picking one is easy. Very helpful and their customer service is top notch! Protecting your business against unseen and unplanned situations is a large part of ensuring the success of your business. Thinking of starting or buying an insurance agency? With an incredible depth of knowledge about an insurance agencys day-to-day operations, the experience Linette gained while managing her agency is vital to our understanding of an agents daily needs. Its more of a throw yourself to the wolves style training, where you learn on the go. Forrester Research, Loyal Insurance Agents Drive Sales, February 2016, 4. Before joining Inshura, Matthew built a very successful insurance business. You may assume the answer is straightforward, but things get complicated based on what kind of agent you are. By David Duford - January 03, 2023 - 5 Mins Read. In order to accomplish our mission, we, at times, are compensated by our partners. As we mentioned above, there are many upsides and downsides to both captive and independent agents. Additionally, independent agents may not have the most in-depth knowledge of all of the discounts offered by a particular carrier. There's no right or wrong choice when it comes to deciding between a captive agent vs. independent agent. They often receive a regular paycheck and product support in exchange for the exclusivity, along with other benefits. Captive vs Independent Insurance Agents - bcs-eo.com Captive vs. Independent: Which Is the Right Path for You? Direct sales agents represent the insurance company they work for. What Is an Independent Insurance Agent? - Ramsey Just like high school sweethearts, captive agents are exactly what some people want. View our Terms and Conditions for details. The leads are then handed off to agents. Their experiences overlap, but a captive agent considering a move to the independent side can expect some significant differences. Today, the landscape is no longer comprised of just the captive agent vs the independent agent. Differences Between Captive and Independent Insurance Agents As an independent agent, you are fully responsible for what . The independent agent is indeed working on your behalf. Working with an insurance broker is especially beneficial if a customer has complex insurance needs or their business is growing and needs additional protection. A captive agent is one who works with one particular insurance company. When it comes to insuring life's most valuable possessions, you want an agent who knows their stuff. When it comes to choosing your insurance agent, there are a lot of options. Turning ideas into products is what Ashwini does best. Fran Majidi manages content on SmartFinancial's website. . And thats okay for me. Market these 5 Essential Skills to Your Health Insurance Clients, Insurance Sales Techniques: The Art of Selling Insurance from Home, How to Market an Independent Insurance Agency, 15 Ideas for Insurance Agent Lead Generation. And they certainly have access to tons of training online such as daily group training calls (which they can plug into) and training videos on a variety of topics. Traveling outside of that scope is highly unlikely and even out of character for a captive agent. With a Computer Engineering degree and later an MBA from the Wharton School of Business, Manals experience and leadership is proven by our rapid growth. If youre unfamiliar with the different insurance companies and just getting started, working with a captive agent who can walk you through every step of the process with their insurer may be helpful. In most firms (not all), agents get together and share their successes of the week. Federal Court Rules Against Classification of Captive Agents as One of the main benefits of this approach is receiving a regular salary, plus commission on policies sold. If you describe something as captive, then its highly likely that the role lacks independence or freedom. Captive companies provide varying levels of financial support for agents, depending on whether the agents are employees or contractors. As an independent agent, I have more control over how I live and organize my work. Subscription implies consent to our privacy policy. The technical storage or access that is used exclusively for anonymous statistical purposes. Learn how with our monthly newsletter. They usually receive ongoing training and are supported by their parent company. Are there any advantages of working with a captive agency? Independent agents tend to make more on each sale they make. On the other hand, independents receive larger commissions. That means you get a better price for a life insurance policy. There are advantages to both paths. Captive agents work exclusively with one insurance company. Do you want to work for a company that sells expensive, top-notch policies to the more affluent or do you want to sell policies that are competitively priced if not downright cheap? When selecting an agent, you'll likely go with an independent or captive agent type. If you're a captive agent, see if your carrier offers cost share programs with SmartFinancial. Thats why, to some degree, I think the industry needs both captive and independent agencies. In some cases, independent agents can even make 50 percent more than captive agents on each sale. So, choose whichever road suits you better. Insurance a lot of times comes down to the age-old question of which one is cheaper? Captive Agent vs Independent Agent: What's the difference? The main difference between an insurance agent and an insurance broker is that agents act as representatives of insurance companies, while brokers represent their clients. Lets run through some of the basic differences, along with pros can cons of each. If youve never had to manage your own time and workflow in any capacity. And thats not a great frame of mind to be in if youre trying to make a difficult career decision. It can seem overwhelming when there are so many agents to choose from. Do you prefer working for one company and getting more marketing support or is a high commission rate your number one incentive? Msg & data rates may apply. If youre looking to be an appointed agency with The Hartford, you can. And, in my practice, I represent half a dozen to a dozen different carriers (as opposed to a captive agent who only represents one company). How do you get clients? However, many Americans still find insurance terminology and policies overly confusing and for good reason. In this article, I will talk about the differences between an independent and a captive agency. It will either be yes or no. A captive agent may be accustomed to formal training programs. If youve never worked independently before. They are less concerned with saving money on, say, auto insurance than knowing they are protected in the event that something goes wrong. The biggest difference between captive and independent insurance agents is in compensation. Independent: What Are The Differences? As such, they sell that carrier's policies exclusively. Typically, they're under contract with that insurance carrier. Stein feels the software available to independents is superior to those of captives, especially the rating systems. You might find that your favorite carries are stuck with that captive agency for at least six months before youre allowed to move them over. If you have questions or to opt-out, please call us at 877-907-5267. The captive agent represents big insurance companies that you've likely heard of, such as Farmers, State Farm, Allstate, and American Family (to name a few). So give this issue some thought before making up your mind. They then pick the option that best suits their budget. 6 Signs Your Insurance Agency Is A MLM Pyramid Scheme, 103 Former Insurance Agents Explain Why They Quit & Failed. No partner can guarantee placement or favorable reviews on AdvisorSmith. Captive agents are provided with financial support (or allowances) to help get their business off the ground, including funds for office space, employee benefits, and other overhead expenses. An insurance quoting and enrollment platform that solves daily challenges experienced by thousands of insurance agents. Independent Agent vs Captive Agent: What's the Difference? They earn a small commission for sales and some may earn additional . Become a Small Commercial Independent Agent With The Hartford. Independent agents aren't paid a salary by the companies they represent. Captive insurance agents work for a single insurance company, while independent agents sell policies from multiple carriers. Sometimes, a captive agents entire compensation will consist solely of commissions. Many insurance agents opt for the independent model. More training and support versus greater sales opportunities, flexibility and long-term earning potential. Everything was pretty easy and standard, and I was really happy with the results. Captive Agents vs. The agent may have a vested interest or a defined payment interest in the value of the book of business, but who they can . If you're comfortable with the idea of being a captive agent and making a little less per sale, you may even decide that you'll work really hard and will have success, especially since you have leads fed to you on the regular. Susan has represented many businesses in diverse but relevant fields including information technology, healthcare, insurance, and professional services. Either way, you're in for a fulfilling career! There's been a pretty healthy debate on this question ever since technology companies began to leverage their Internet skills for large profits. Im used to being an independent business owner. First, youre responsible for your lead generation. Product flexibility source the product your client needs. While captive agents generally only sell their own carrier's policies (like only selling policies from All State or State Farm), there are some exceptions. When your needs change, so can your insurance policies. First things first, full disclosure, Im an independent agent and always have been. One of the benefits of being an independent agent? Alternatively, a captive agency will feel like you work for someone else. Sometimes, they are an independent contractor paid by some combination of salary, commission, and bonus. The quality varies by carrier, but the training and support are readily available., Independent agents must purchase their own systems. No matter where I recruit an agent from, they have access to me personally for support and advice. At Patriot Insurance Company, we only do business through independent agents. Many of the large national insurance companies employ captive agents who are responsible for becoming experts and selling the companys exclusive suite of insurance products. Do keep in mind that you will have to invest your own money, which means risk. For one thing, you cannot shore up on leads and take your sweet time reaching out to them. In a class action lawsuit, captive agents of American Family Insurance Company argued that the insurer misclassified them as independent contractors when they actually qualified as employees under the Employee Retirement Income Security Act (ERISA). Occasionally, you can sell other products. Matched marketing partners may include: Allstate Insurance, American Family Insurance, All Web Leads, Bizinsure.com, Choice Direct, Country Financial Insurance, Erie Insurance, Farmers Insurance, Hartford Insurance, Liberty Mutual Insurance, Nationwide Insurance, Hiscox Insurance, Precise Leads, Progressive Insurance, SAFECO, SelectQuote, State Farm Insurance, SolidQuote LLC, Travelers Insurance, Zurich Insurance. Tree Care Insurance Risks Interactive Map. First of all, there are many contracting hang-ups that, for me, create a make or break type situation. I disagree with this. Some considerations you'll want to think about when deciding between becoming a captive agent vs. independent agent include: Many small businesses struggle to understand the complexities ofbusiness insurance. Inshura is fully integrated with the ACA marketplace and private carriers. As a captive agent, you work under ONE agency. If you're of the first set, you'll work hard but you'll probably meet the kind of success you're seeking as an independent agent. The Benefits of Working With Independent Agents. All captive agents are paid exclusively by the insurance company that employs them. On the flip side, agreeing to sell a single insurer's products can limit your potential clientele and earnings. Captive Insurance Agents vs Independent Agents: Mistakes to Avoid On average, anindependent agent's salaryis $117,895, split between a base pay of $80,715 and bonuses and commissions of $37,181. Theres one pro that I forget to mention that relates to agencies. Plus, theres usually some hands-on training involving the whole team, providing you with an opportunity to create strong relationships with your colleagues and build rapport. A captive insurance agent, sometimes called a dedicated agent, will work for only one insurance company and solicit only that company's products. If you're given free insurance leads from the insurance company you work with, chances are that they spent money on your behalf. She has a B.A. Independent agents are not considered employees of a single company. That's essentially the biggest distinction, but like anything, the devil is in the details. Captive Agents Vs. Captive Agent vs. Independent Agent | The Hartford Captive Vs. Independent Agents: What's The Difference? It's less sink-or-swim as a captive agent, and you won't be spending as much money on buying insurance leads, business cards, direct mail material and advertising costs. A captive agent is like a person with a one-track mind; they can only sell insurance policies from one company. The captive agent is mostly limited to only selling policies of the company they are employed by. If everything else is equal, you should be able to do better as an independent.. Captive agents have to meet quotas set by the insurance companies. Captive agents are typically full-time employees compensated with a salary, benefits, and commissions. The independent agent earns commissions and bonuses, or in Wall Street parlance, you eat what you kill. Do you have an entrepreneurial streak? They are typically educating themselves on numerous lines of coverage because there's more to know. In my agency, for example, I offer my agents multiple lead options. Youll also want to make sure youre paid directly from the insurance carrier not the agency. Regardless of the specific compensation scheme, they sell and service only the products available through the insurance company they are representing. In either environment, it is largely up to the agent to develop a sales prospect pipeline. Not everyone can stay motivated without a team of colleagues encouraging you along the way. Regardless of whether you choose to be an independent agent or a captive agent, both career paths offer great opportunities. If you decide to quit a captive agency, they benefit from your hard work while, in most cases, youre left at a disadvantage. You should consider working with a captive agent if: You should consider working with an independent agent if: As a business owner, you are tasked with making the best financial choice for your business. Those details include how agents are paid, how they market, how they get leads, and more. I also believe that it solicits the most freedom. You own the book of business, which can accrue in value. 30+ Hours Insurance Sales Training, Scripts, Books, And More Yours FREE! And like most office-type work environments, theyll be certain expectations that you have to meet. Unsure about which one is better to work with? Since they are able to offer a diverse array of products, independent agents may not know extensive details about specific products. There is a difference between a captive . If youve got ZERO experience in straight commission sales. Typically, a captive agents compensation includes a base salary and a commission on the policies that they sell. Independent Agent: Salary or salary plus commission. If youre new to the industry and happy to be an employee under the control of a company, I would suggest a captive agency. However, the service and products that they offer you can widely vary. We use cookies to optimize our website and our service. We turn to her to take a vision and mold those ideas into viable products. Because they are not employed by one single company, they may be able to give more candid feedback on which policy may be the best for you. Both brokers and agents are mandated by state regulations to assist consumers in purchasing insurance policies at a reasonable rate. However, brokers can't suggest policies to customers based on the commission they'll earn asthey have a fiduciary duty to their clients, though they can charge a broker fee for their serviceswhich can include ongoing advice about a customer's insurance situation. Advertiser Disclosure Home / Business Insurance Coverage / Captive Agent vs Independent Agent: What's the difference? Captive Agents vs. Captive Agents Vs. Independent Agents - Senior Financial Group It is also possible for you to have more influence over the branding and marketing of your business. What you should know above all else is that a road paved with quality leads is the only road to success for all insurance agents. A captive agent is generally limited to offering the products of the one carrierthe agent represents.