Comparing Captive Insurance Agents vs. Independent Insurance Agents

Many people have a preference concerning the type of insurance agent they choose. For some, the choice of an independent insurance agent is a must. These consumers seek the services of an autonomous agent that will search the insurance marketplace for the policy that best fits their individual needs, without the pressure of being sold a policy that bears the insurance agent’s (referring to a captive insurance agent) bi-weekly paycheck, due to a higher commission. On the other hand, others would rather have a captive insurance agent who is associated with an established company, such as Prudential or MetLife.

The Difference between a Captive and Independent Insurance Agent

Independent agents do not work for a specific insurance company. These insurance agents are definitely self-employed, which may not be the case for a captive insurance agent. Generally speaking, the majority of times an independent insurance agent will send a licensing application to an insurance company in order to become licensed to sell that particular company’s insurance products. If the independent agent is approved to sell the company’s insurance, he or she will usually report to a general agent for supplies, sales support and other miscellaneous needs. Keep in mind, the independent agent may be required to sell a few policies each year in order to remain his or her license with the insurance company; therefore, the general agent is not usually pressuring the independent insurance agent for additional sales.

Captive insurance agents work as employees, or in some cases, as independent contractors for an insurance company. Most captive insurance agents can only sell insurance products that are issued by the insurance company that employs them. For example, if you work for XYZ insurance company, in most cases, you sell XYZ insurance products, and nothing else. In recent years, many of the larger insurance companies and some of the smaller ones have allowed their insurance agents to sell the insurance policies of other insurance companies through the captive insurance company’s general agency. In essence, the captive agent’s insurance agency contracts with other insurance companies in order to offer insurance products of their competitors (i.e. life insurance or disability insurance). Generally, the captive agent will usually receive a smaller commission for selling a non-company insurance product vs. a company insurance product. Nevertheless, the line between being a captive agent and an independent agent has been blurred, except for the fact that an independent agent can usually go to any insurance company of his or her choice and apply to be licensed by the company.

There a Several Ways Captive Insurance Agents Get Paid:

1. Salary only – There are certain sales goals for these insurance agents, whether it be weekly, monthly, quarterly, and/or yearly.
2. Salary + commission – These insurance agents receive a reduced salary and additional income from sales. In most cases, sales of company issued products will bring higher commissions than non-company products.
3. Commission only – These are insurance agents that receive all of their money from commissions. There is no salary.

Independent insurance agents get paid in the same manner as the commission only, insurance agents. There is absolutely no salary.

Conclusion

In today’s insurance world, there is little difference between a captive insurance agent and an independent insurance agent. In most cases, both types of agents have many insurance products to choose from, as a result of insurance companies creating general agencies for their captive insurance agents. You might even find that some captive insurance agents are able to sell the insurance products of more insurance companies than can some independent insurance agents, as a result of their companies’ general agency.

While captive agents usually get paid more for selling company brand insurance products, independent insurance agents can also be influenced to sell the insurance products that pay them the highest commission.