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Captive Agents Or Independent Agents [How to Choose]

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Most people are familiar with insurance and how to obtain it from insurance carriers, anything from life insurance to car insurance. But did you know there are two different kinds of insurance agents? They typically fall into two categories—captive and independent insurance agents. 

What is a Captive Agent?

A captive agent is simply an insurance agent that works for a specific insurance company (such as Geico, Progressive, The Hartford, Farmers, etc.). Captive agents are typically full-time employees compensated with a salary as well as commissions. 

Pros and Cons of a Captive Insurance Agent

Because captive insurance agents work exclusively for one insurance company, this allows them to learn that company’s products, policies, and guidelines inside and out. They should be familiar with the different coverage options and claims submission processes. They are usually well-trained and supported by their parent company. 

Secondly, captive insurance agents often don't have to handle their own lead generation, advertising, marketing, or cover the overhead cost of the business—the insurance company does that. This frees up the agent to spend more time doing research for clients as well as building relationships. 

The downside of working with a captive agent is that they are often being pushed to meet a sales quota. They may be pushier with higher-ticket policies or be trying to “close the deal.” The other obvious downside is that they can only sell policies with one insurance company and can’t provide a variety of options for your business. 

Lastly, a captive agent can only sell you the policies they have access to. That means there is a limit to how low their prices can go and the options available to their customers. Captive agents work with a predetermined set of policies and are often only allowed to discount a policy a certain amount. 

What is an Independent Insurance Agent?

An independent insurance agent does not work exclusively with specific insurance companies. They are able to sell insurance policies with multiple insurance carriers and can shop around to find their customer’s the best rates for the coverage they’re looking for.

Pros and Cons of Independent Agents

Most independent insurance agents run their own businesses or work with a group of agents in a unified agency (to share expenses). They have to cover their own office expenses, marketing, and lead generation. This can mean they are stretched thin and don’t have extensive time to dedicate to customer research and relationship-building. 

Independent agents don't have a full-time salary or benefits if they’re working solo. They likely rely solely on commissions from whatever insurance carriers they write a policy with. However, they may receive higher commissions than captive agents, depending on the insurance company(s) that they work with.

Choosing a Captive Agent Vs. Independent Agent

Ultimately, whether you choose to work with captive agents or independent agents depends on what your goals are for your small business. 

  • If you’re trying to get the best prices possible, it may be better to work with an independent agent. They have a wide variety of access to multiple insurance policies and companies.
  • If you’re looking to build a long-term relationship, an independent agent can help you find different insurance options with different insurance companies that fit your business year-after-year. When your needs change, so can your insurance policies.
  • If you’re unfamiliar with the different insurance companies and just getting started, working with a captive agent who can walk you through every step of the process with their insurer may be helpful. It can be an easier user experience that is less overwhelming.
  • Captive agents may be able to devote more time and research to help you craft the best policy for your small business.
  • A captive agent can help you find a great policy that will fit your specific needs and budget.

Need Help Deciding?

If you need help deciding what type of insurance agents to work with, or are looking to get a quote on an insurance policy, feel free to reach out! You can connect with us directly by calling 877-907-5267 or by completing the form at the top of the page.

Related Articles: How to Choose an Insurance Agent, Commercial Insurance Agent

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