Captive Agent vs. Independent Insurance Agent

Before taking the big leap into the insurance agency world, you must first consider which type of agent you choose to be. Prior to making any decision, it’s important that you learn all the information there is to know. Get to know the advantages and disadvantages to both types of insurance professionals.

What Do They Do

A captive agent and a non-captive agent both sell insurance products to a wide a variety of customers. Both types of agents can sell any form of insurance to any type of customer, as well as solve problems for them by using their knowledge and their product lines. They are both respected for helping people by providing them with the insurance protection they need. The differences start to arise when you really take into account who each agent works for and how they conduct business. There is no right or wrong type of insurance agent.

Independent Insurance Agent

An independent insurance agent is his/her own boss who runs their own office and chooses which companies they want to represent. They set their own hours, determine the ways in which their business should be marketed, create their business’ public image and make all of the decisions regarding what products are used to satisfy a customer’s needs.

Benefits of an Independent Insurance Agent

  • Makes their own business decisions.
  • Chooses what companies to represent – based on products and pricing offered. (allows to provide high-end insurance to people with significant financial resources, as well as offer quality low-cost solutions for other clients).
  • Can sell any type of insurance products they choose.
  • Can sell commercials, personal lines and can insure luxury items.
  • Can opt to sell niche products that will open the business to more potential customers.
  • Works with almost no micromanagement from the carriers they represent.
  • No sale quotas to worry about and can book as much or as little business as desires.

Becoming an Independent Agent

To become an independent agent, you must get all of the proper licenses required by your state. This includes life and health, property and casualty, and your Series 6 & 63 licenses for securities and any other business licenses you need to run your business. Once you are a licensed agent, you can set up your legal entity.

Captive Insurance Agent

A captive agent only works for one carrier. Being a captive agent simply means that you are exclusive to just one agency.

Benefits of a Captive Insurance Agent

  • Your business is backed by a large insurance corporation with a national (and possibly international presence.
  • Compensation package offered by each carrier varies, but may include base salaries, bonuses and full corporate benefits.
  • Strong financial incentives to working solely for an insurance company.
  • Doesn’t need to worry about setting up a legal entity.
  • Is provided with operational support, such as accounting, recruiting and training.
  • Since day one starts with a recognized name with millions of marketing dollars per year behind it.

Challenges of a Captive Insurance Agent

  • Your clients belong to the company they work for.
  • Clients and the business you book every year will remain property of the company you represent.
  • Must follow all guidelines and rules of the company for which they work for.
  • You are not your own boss.
  • Work hard to achieve company goals that might not match your own.

Becoming a Captive Insurance Agent

You must first begin by discussing the possibility of opening an office in your area with an insurance company. If you are approved to open an office, you must then acquire all the licenses required by the state and by the company you select. You will then receive steps on how to open and run your agency.