Independent Agent vs. Captive Agent
Insurance agents act as the intermediary between the insurance carrier and the named insured in an insurance transaction. These insurance professionals are appointed by an insurance company to sell insurance policies on their behalf. In return insurance agents receive a certain percentage of commission from the insurance carriers for each policy that they manage to sell. However, to become a licensed insurance agent, they must first go through pre-licensing courses and pass the state exam to legally conduct business within their respective states. Insurance agents must also follow regulatory requirements established by state law makers and adhere to a moral ethical code when doing business with policyholders.
There are two types of insurance agents: captive agents and independent agents.
Captive Agents are appointed by just one insurance carrier and are obligated to only sell policies from that insurance company. These agents are trained and developed by these companies, and have an in-depth knowledge on all the policies sold by that insurance carrier. However, they are a limited market and are not able to assist clients who don’t need or are ineligible for one of the company’s insurance products. Captive agents are also sometimes pushed to meet certain sale quotas and sell certain policies by the parent company within a certain time period. As a result these agents are acting more within the interest of the insurance carrier as opposed to the insured.
Independent Agents on the other hand represent multiple different carriers and can efficiently search through the market to find the best prices for the named insured. These agents are truly independent from the carriers that they represent and in theory can objectively evaluate different insurance policies to best fit the needs of their clients. However, in return these agents are responsible for paying their own expenses, learning about the company’s products, going though development and training on their own, and keeping record of their commissions and income.
An example of an independent agency is The Sarrica Group, Inc. As an independent agency we are truly able to put the best interests of our clients as a top priority because we have multiple carriers to choose from and extensive access within the insurance marketplace.