On the other hand, independents receive larger commissions. Workers' Comp + Payroll made 100% for you. Captive Agent or Independent Agent: Which Should You Choose? - SIAA First, youre responsible for your lead generation. Because they can only sell one companys products, they will know exactly all the details of a specific policy and can help assist you when you are deciding between several different offerings from one company. If you're a captive agent, see if your carrier offers cost share programs with SmartFinancial. On average, anindependent agent's salaryis $117,895, split between a base pay of $80,715 and bonuses and commissions of $37,181. Thank you! Its more of a throw yourself to the wolves style training, where you learn on the go. They may be pushier with higher-ticket policies and actively work to close the deal. The other obvious downside is that they can only sell policies with one insurance company and cant provide a variety of options for your business. The insurer generally provides excellent training in products and services. OReilly and Totah say that captive sales managers may accompany new agents on early sales calls and give them feedback on their presentation and closing techniques. Captive insurers usually offer a base salary, benefits, and office space. This can mean they are stretched thin and dont have extensive time to dedicate to customer research and relationship-building. Independent agents are almost 100% on their own to generate leads, unless they partner with a lead provider. You have a diversified income sourceacross multiple carriers. For some prospects, the choice is everything when it comes to coverage options that meet their insurance needs. For the agent, though, there are both good and bad points to consider when deciding whether to be a captive vs independent insurance agent. Captive Agents Vs. If you dont know what a release is, its pretty important to understand. Check out these other insurance broker related articles: Filed Under: Broker Blogs Tagged With: NIP Group. How to Choose. Many independent agencies may suggest some lead options, but you have to pay for them. Captive Agent vs Independent Insurance Agent Written by: Ethan Peyton Home Captive Agent vs Independent Insurance Agent Last updated: March 20, 2023 Anyone considering starting their own insurance agency will have to decide between being an independent insurance agent or a captive agent. Pros and Cons of a Captive Insurance Agent However, many Americans still find insurance terminology and policies overly confusing and for good reason. Mr. Panicker received his degree in Computer Science, then earned a Master of Science in Computer Science from Drexel University in Philadelphia. Lastly, captive agents can only sell you certain policies they have access to. Captive Agent vs. Independent: What Are The Differences? That means there is a limit to how low their prices can go and the options available to their customers. Mike Stein, an agent in Austin, Texas who transitioned from captive to independent, mentioned the mentoring opportunities on both sides. One of the downsides of working with an independent agent is that although independent agents are not employed by a single company, they are compensated largely by commission. You cannot do business with any other organization. And Im 36! Going at it cold is not a good idea.. In my agency, for example, I offer my agents multiple lead options. We feel it gives our policyholders a better experience, and a true partner they can rely on for years to come. Under Matthews stewardship, Inshura has grown year-over-year, with inshura experiencing a 5x growth in health insurance sales. What's the difference between captive and independent insurance agents? Captive Agent vs. Independent Agent - A.D.Banker Pros and Cons of Being a Captive Agent. If you immediately recoil at the thought of this, then chances are an independent agency will be the better choice for you. Works with more than 20 different insurance companies so you have an insurance policy that meets your coverage needs as well as your budget, Works with many local insurance companies who don't waste their money on advertising thus keeping more of your money in your community, Can only write the types of insurance their company offers, Works for a corporation with a large advertising budget. However, not everyone can deal with that pressure. If you're given free insurance leads from the insurance company you work with, chances are that they spent money on your behalf. When you are shopping for insurance agents, you want to be sure that you know what you're getting. Independent insurance agents have many brands and verticals to sell and can be more objective about what works for one client versus another. One call and I had a policy within hours! If youve got ZERO experience in straight commission sales. And even if you leave that particular firm, youll continue to get paid all the same. We feature products and services from companies we find reputable, whether or not they are our advertising partners. They had the quote to me within minutes and policy up and running shortly after. Their primary responsibility is to navigate the insurance industry and shop around for a policy that suits their client's needs, both in terms of coverage and budget. Lets run through some of the basic differences, along with pros can cons of each. The contract with the carrier may permit limited access to alternative markets, but the agents fortunes rise and fall primarily based on what the carrier offers. You cant make excuses when things dont work out. Very pleased with their service. Susan has represented many businesses in diverse but relevant fields including information technology, healthcare, insurance, and professional services. The technical storage or access that is used exclusively for anonymous statistical purposes. Let's dive into the differences between the two so you can make the best decision for you, and your career. Independent: What Are The Differences? Are you willing to put up some of your own capital to get started? Captive Agents Vs. Independent Agents - MIAA Insurance An independent agent on the other hand, is not solely contracted to just one insurance company. Fill out the form below and a broker relationship expert will be in touch shortly. Captive insurance agents work for a single insurance company, while independent agents sell policies from multiple carriers. The pros of being a captive agentvs an independent agent. An independent even has the ability to seek coverage from companiesthe agent does not represent, using wholesale and excess and surplus lines brokers. Independent agents can be very useful when comparison shopping different policies. Forrester Research, Loyal Insurance Agents Drive Sales, February 2016, 4. More specifically, you need to know the difference between the independent and captive agents since they're the most common. If youre looking to be an appointed agency with The Hartford, you can. Contrary to a captive agent, an independent agent is an insurance agent that sells insurance policies from many different insurance companies. In a captive agency, there is a focus on either one product or one market. Yes and no. The Marketplace for Insurance Agency Acquisitions and Resources, Get a Weekly Listing of Insurance Agencies for Sale Get our Weekly Newsletter Get our Partner Announcements. And, for what? With more than twenty-five years of experience in commercial litigation, commercial transactions, and regulatory compliance, Susan, our Chief Legal Officer, oversees Inshuras legal and compliance responsibilities. We've got your best interest in mind. Not everyone can stay motivated without a team of colleagues encouraging you along the way. An independent agency assumes that youll get up and go to work by yourself no manager or supervisor needed. They should be familiar with the different coverage options and claims submission processes. Let's look at the benefits and downsides of working as an independent agent. For coverage please contact an independent insurance agent. OReilly says it doesnt take long to master a captive companys technology, since that company is the only one the agent is working with. Imagine the limitations of that position. After all, you're protecting your assets, livelihood, and quality of life. Captive Agent vs Independent Agent - Which Is Right for You? Every morning I wake up knowing that if I dont make enough sales, thats my responsibility to bear. Independent Agents The freedoms you have as an independent agent are often much greater. Insurance agents are professionals who can help you navigate the often tricky process of purchasing insurance and assessing the needs of your business. In order to accomplish our mission, we, at times, are compensated by our partners. The carrier or agency may have already developed a marketing plan and sales promotion campaign for all affiliated agents, so you will not have to spend as much time to develop your own marketing. This can help you appeal to a wider target market, but there are still some considerations to keep in mind before you go independent. If youve never worked independently before. This means you have complete ownership of your book of business. 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. However, the service and products that they offer you can widely vary. Or maybe you already are an insurance agency, but youd like to weigh out the pros and cons of which path is right for you going forward. Our independent agents shop around to find you the best coverage. A captive agent sells directly for one insurance company, while an independent agent can sell policies from multiple carriers. An independent insurance agent either works for an independent agency or as their own boss. And as a bonus, you don't have to pay them because the. When selecting an agent, you'll likely go with an independent or captive agent type. Its a much safer bet. Sams employer is Nationwide, to whom Sam is responsible for achieving sales goals. Have you always wanted to be your own boss? Now, this part is crucial. She writes books under her given name, Afarin Majidi. Fran Majidi manages content on SmartFinancial's website. Both brokers and agents are mandated by state regulations to assist consumers in purchasing insurance policies at a reasonable rate. Captive agents will also likely have more knowledge of discounts offered by their carrier, particularly discounts on bundled policies. Additionally, because of their experience and knowledge, captive agents can provide exceptional customer service. If youre thinking about selling insurance, youve probably heard the phrase, captive insurance agent or independent agent and wondered what it means. Because they're operating their own business, any ongoing training they receive is their responsibility. They have a wide variety of access to multiple company's insurance products. Any advice and counsel you seek from an insurance agent during this process can greatly impact your business for years to come. Independent contractors may still be motivated to sell policies from companies that award them a higher commission percentage. 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. Lastly, independent agents are personally responsible for their overhead and marketing costs and may not be able to devote as much time to an exceptional customer service experience as a captive agent would. A captive agent can only show you quotes from one company, the company he or she represents. One of the benefits of being an independent agent? Independent sales reps have the flexibility to work from home, the corner coffee shop, or anywhere else they choose. This frees up the agent to spend more time doing research for clients as well as building relationships. A captive agent is employed by and earns a salary and benefits from the insurance company that they represent. Income is a bit more reliable and consistent. Sometimes, a captive agents entire compensation will consist solely of commissions. So, let me give you a couple of examples. It's like they're stuck in a relationship with one brand, kind of like a high school sweetheart. Differences Between Captive and Independent Insurance Agents Just remember, dont opt for an independent agency just because you want more freedom. The truth is probably somewhere in between. The quality varies by carrier, but the training and support are readily available., Independent agents must purchase their own systems. Youre going to have a manager. 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. Benefits of Independent Insurance Agent vs. a Captive Agent 2023 AdvisorSmith Solutions, Inc. All Rights Reserved. This can make it simpler and easier to sell all the insurance coverage a client needs by bundling policies together and securing multi-policy discounts and other benefits. 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. Here are some of the major ones: Independent agents have to provide their own start-up capital. Independent agents tend to make more on each sale they make. In a typical captive insurance contract, the real owner of the insurance account is the company. For instance, if you work for a property and casualty captive firm, its highly likely that your only product will be car insurance or homeowners insurance. In this article, I will talk about the differences between an independent and a captive agency. When comparing being a captive agent vs. independent agent, exclusivity is the main difference. Tom serves as the Senior Vice President of Specialty Programs with over 12 years of experience in the insurance industry, specializing in the business development and client growth sectors. Captive Agents vs. Independent Insurance Agent | Know the Difference Captive Agent vs. If you need help deciding what type of insurance agent to work with, or are looking to get a quote on an insurance policy, feel free to reach out! As a result of not being employed by a specific company, independent agents can bring variety into your search for an insurance policy. You may also be able to set up your own office, subject to corporate policies. As an independent agent, she is not an official employee of any of these companies, although she may receive a commission for her sales. Differences of an Independent Insurance Agency vs Captive - OAA Even then, most agents partner with at least one outside lead vendor, sometimes multiple vendors. As an independent agent, I have more control over how I live and organize my work. Who is best? Thank you guys so much for reading, and I hope you found this article useful. - AgencyEquity There are two broad categories of insurance agents: "Captive" agents who represent one specific carrier, and "independent" agents who represent multiple Skip to primary navigation Skip to main content Skip to primary sidebar Home List Confidentially Advertise About Here are the pros and cons. Independent agents do not work exclusively with specific insurance companies. I operate in the final expense world as an agent. How do you get clients? That said, independent insurance agents are also responsible for . 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. As part of our ongoing effort to provide you with the best possible service, SmartFinancial and its Service Providers may monitor and/or record and retain all activity on this website and its applicable links, for informational and quality control purposes. So, the answer is yes, you should buy your leads, but you should use these leads wisely. A captive agent is like a person with a one-track mind; they can only sell insurance policies from one company. Here's an image that shows independent agents vs. captive agents and how they relate to brokers. Specialty insurance program manager serving over 25 niche industries. One of the main benefits of this approach is receiving a regular salary, plus commission on policies sold. This material is provided for informational purposes only and does not provide any coverage. Large insurers who work through captive agents generallyfund national promotional campaigns online and off. Independent agents have disadvantages, just as captive agents do. You compete against large national brands and budgets. She has a B.A. But, then I realized through training my agents (1000 plus now) that some people are better suited to a structured office environment. Captive insurance agents, or exclusive insurance agents, work for one company in the insurance space. That's essentially the biggest distinction, but like anything, the devil is in the details. A captive agent may be accustomed to formal training programs. The leads are then handed off to agents. Often, the leads are actively looking to make a purchase so if you're not calling right away, it's just one fat loss. The agent may have a vested interest or a defined payment interest in the value of the book of business, but who they can . In an independent working environment, you need to be assertive, self-motivated, and have a strong entrepreneurial attitude. Its best to think about the agent as an individual, not a company. All captive agents are paid exclusively by the insurance company that employs them. However, as a business owner, it is important to know the difference between the types of insurance professionals in order to make an informed decision about the insurance agent you choose to work with. Consent is not a condition of purchase; opt-out anytime. We, like you, are small business owners, and your success is our success. Regardless of the specific compensation scheme, they sell and service only the products available through the insurance company they are representing. Working with an agent may expedite and clarify the insurance purchasing journey. Would recommend highly! All insurance agents are licensed professionals whove studied and earned credentials from their state insurance authority in the lines of insurance hey representthats one commonality, and a strength that should be cited in marketing. Because you're not obligated to sell any one company's insurance products, you can operate as an advocate on your client's behalf by shopping around and identifying the best policy available from the different carriers you represent. As an independent agent, you'll be paid only on commission, so you're always out to close. 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. Some captive agents are paid a salary. The contract with the carrier may permit limited access to alternative markets, but the agents fortunes rise and fall primarily based on what the carrier offers. The only downside is that it comes fraught with difficulties that might be hard for some people to understand. Everything was pretty easy and standard, and I was really happy with the results. The benefit of a captive agent is that he or she is very well versed and experienced in all their companys offerings. What Is an Independent Insurance Agent? - Ramsey Without a subpoena, voluntary compliance on the part of your Internet Service Provider, or additional records from a third party, information stored or retrieved for this purpose alone cannot usually be used to identify you. It is possible that you know someone who works for State Farm, Geico, or Allstate as a captive agent. Privacy Policy. Becoming an independent insurance agent can give you more freedom to recommend and sell a broader range of insurance products. Just as it has with all other industries, the Internet has disrupted the insurance distribution system and the competition has expanded to include direct or Internet-based access to insurance products. When selecting an agent, you'll likely go with an independent or captive agent type. Some agents complain that theres not enough support. That number will vary depending on the class of business (there may be a lot of competition for property insurance on law offices and very little for automotive body shops), but an independent has more alternatives than does a captive. As an employee of an insurer, they sell products directly to customers. It may seem tempting to become a captive agent because they are given the tools needed, but they make less commission than an independent agent. Independent agents aren't paid a salary by the companies they represent. That means you get a better price for a life insurance policy. Captive agents are typically full-time employees compensated with a salary, benefits, and commissions. Both types of insurance agents are bound by regulation to act reasonably to help you obtain insurance for your business. If youve never had to manage your own time and workflow in any capacity. As an insurance agent, it's your responsibility to demystify insurance to help business owners protect their companies and employees. A captive insurance agent can be a great choice for your business. On the flip side, agreeing to sell a single insurer's products can limit your potential clientele and earnings. As a captive agent, you might sometimes sell a competitor's policies if your parent company doesn't offer that kind of insurance coverage. She may be able to offer policies from AIG, Nationwide, and Progressiveall to one client. Captive Vs. Independent Agents: What's The Difference? 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. You gain the benefit of brand association and recognition. Independent Agents While these differences are significant, perhaps the most important difference is in what each type of agent can expect to make. This website is operated by Inshura and is not the Health Insurance Marketplace website. By entering my phone number and/or email, and clicking "Go To Final Step", I agree to receive recurring marketing emails, calls (including artificial or prerecorded voice), and texts at the number I provided to Tivly and one or more of our insurance-related partners via an autodialer, even if my number is on a Do Not Call list. US Insurance Shopping Study, J.D. Fax: 732.791.1630 Just like high school sweethearts, captive agents are exactly what some people want. If you are not the most self-motivated individual or if you want a more direct line to a parent company, being a captive insurance agent is much easier, but by no means is it easy. In contrast to insurance agents, insurance brokers represent customersnot the insurance provider. Typically, a captive agents compensation includes a base salary and a commission on the policies that they sell. Typically, they're under contract with that insurance carrier. Ive worked with a lot of agencies that have released their agents to me, and likewise, Ive released my agents who wanted to move on to other agencies as well. Plus, many independent agencies nowadays will release. Traveling outside of that scope is highly unlikely and even out of character for a captive agent. Make sure to work with leads companies likeSmartFinancial, which fosters the growth of their partner agents. Go into the process with realistic (but positive) expectations and you will win. As part of the relationship between the captive carrier and the captive agent, agents in Start, Own and Grow an Independent Insurance Agency with over 300 direct carrier appointments, industry leading commissions, profit sharing, advanced commercial insurance training, full backoffice support, access to quoting systems, and agency analytics .
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