Christian Business Networking Association

Captive versus Independent Insurance Agent

There are basically two types of insurance agents.

One type is a captive or house agent. They primarily sell for one company. Their names include American Family, Farm Bureau, Farmers, Nationwide, and State Farm. Some agents are employees of the company and all agents can be told by corporate management to increase sales in one area or they might be terminated.

If a client is unhappy with premiums the only options are to decrease coverage limits or increase deductibles. Either way they are telling the insured to assume more risk if the client needs to be within a budget.

The other type is an independent agency who usually has four or more carriers available for auto/home or business insurance. Some of the companies you might see at an independent agency are AAA, Liberty Mutual (Safeco, Indiana), The Hartford, and Travelers.

The independent agent can choose what company works out the best for each client and if an insured is unhappy with one company they can be rewritten to a different one. Considering that financial planners advise you to shop your insurance every 3-5 years it’s possible the independent agent will shop for you at every renewal, when rates go up, or when you have certain changes in your circumstances. Examples of changes include first youthful coming on, last youthful driver coming off, accidents/tickets coming off or going on, vehicle types/usage, and moving to a different residence.

It’s true that the companies expect sales volume, but the agency can terminate the contract with the company if the local office dosen't think the carrier is worth keeping.

In summary, insurance should not be like a Snuggy where one size ftis most.

Tags: captive, independent, insurance

0 members like this