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The Truth Behind Being a Captive or Independent Insurance Agent
History tells us that something like an insurance mechanism was recorded more than 2,700 years ago in ancient Babylon. Did the merchants of that time and place check with local insurance agents to get quotes? Probably not, but insurance agents and brokers have been around for most of the modern insurance era. From the earliest days, a dual system of insurance distribution developed. Some carriers employed agents who sold only their own products (“captive” agents,) while others hired the services of agents who sold for multiple companies (“independent” agents.) If you are trying to decide which direction you would like to go to be an insurance agent, this information is for you.
The Benefits of Being an Insurance Agent
The benefits of being an insurance agent are many, but the most obvious is that you can earn a living doing what you love. But there are other benefits too. In addition to being your own boss, becoming an insurance agent allows you to: Earn a higher income than most people do. The average commission-only worker earns between $50,000 and $65,000 a year. It’s not uncommon for some agents to earn six figures in their first year! And if you get good at it and build up your client base, you could even be making more than that!
Live the lifestyle of your dreams. If being tied down by a 9-to-5 job doesn’t sound like fun — or if having more time with family and friends is important — then becoming an independent insurance agent may be right for you. While there are no guarantees in life, as long as you’re willing to work hard and put in the effort required, there’s no reason why you can’t live the lifestyle of your dreams while earning a good living at the same time!
Work from home (or anywhere). As an independent insurance agent, it’s up to you when and where you want to work, which means no more commuting
What Is a Captive Agent?
A captive insurance agent sells insurance products for only one insurance company. This parent company will typically provide their captive agents with a salary, plus commission and benefits. Captive insurance agents also benefit from the insurance company’s broader marketing strategy.
What is an Independent Agent?
An independent agent is a person that sells insurance products from various companies in the insurance industry. Independent agents and brokers don’t work for a specific insurer. Instead, independent agents work for an insurance agency. So, they’re able to give their clients options when they’re looking for insurance protection.
Pros and Cons of Insurance Agent Types
Each agent represents a different way of working. In fact, there are pros and cons to being both captive and independent agents. To learn more about what’s right for you, read through the lists below:
Some advantages of being a captive agent include:
- Financial support from the insurance agency you work with: Many insurance companies provide financial support, like salaries and commission to their captive agents.
- Marketing support: Captive agents often receive client referrals from the insurance company they’re working with. They also may offer ongoing training for business topics.
- Increased product information: When you work for an insurance company, you have access to their product experts. This can help you better educate your clients about potential products, which can help increase sales.
What are some disadvantages of being a captive agent? They can include:
- Turning down some clients: If a client doesn’t fit the insurance company’s requirements, you may need to turn them down. You won’t have additional company’s products to sell.
- Difficult sales quotas: Insurance companies may push certain products that may not fit your client’s needs. You also may face high sales quotas when working as a captive agent.
- Decreased customer retention: The insurance company you work for may often change their product’s pricing or offerings. This can cause certain clients to look elsewhere for coverage. You won’t have the option of showing them additional options.
Some advantages of being an independent insurance agent include:
- The ability to own your own business: Independent agents often pass on their clients and business to a person of their choice due to death or retirement. Captive agents’ clients revert to the insurance company.
- Increased access to products: As an independent insurance agent, you can sell policies from multiple carriers. This can help you offer a variety of products to customers, which can help you retain them.
- You can set your own goals: As a self-employed independent agent, you set your own sales quotas.
Disadvantages of being an independent insurance agent include:
- Less financial support: Independent insurance agents don’t receive a salary from insurance companies they work with. Their agency receives commission for policies sold.
- Less marketing support from insurance companies: As an independent insurance agent, marketing support will be limited.
- Less access to financial experts: You may have access to products and services seminars. Captive agents may have easier access to insurance experts.
All Nevada Insurance is an independent insurance broker that has the ability to write for 100+ companies. Our goal is to give you all the tools to become a successful insurance agent under our brand. We do the legwork to get you the appointments you need, we offer profit sharing based on the company’s premium and not your own independent premiums. There are so many more advantages of being an independent in a franchise system. Feel free to reach out to us for more information.