When it comes to insurance there are generally two kinds of agents you can use: captive agents and non-captive, or independent agents.
Let’s take a look at the pros and cons of both:
Captive Agents
By definition, captive agents work exclusively for one insurance carrier and are obliged to give business only to that company. Now there are a few minor exceptions, such as when a captive agent belongs to affiliated groups of their parent company, then in this case, the captive agent’s priority is to develop business for the parent company above all others. So they may sell various policies from different members that are all part of one group.
Why would someone be a captive agent? Well, generally by pledging allegiance to a specific company, then in return, the insurer usually provides its captive agents with an allowance for office expenses and benefits such as pensions, life and health insurance, continued insurance training and credit union membership.
Captive agents tend to offer a wide variety of coverages-greater than the coverages available through independent agents and brokers.
Benefits of using captive agents:
– Starting resources often provided by parent company, so you know your agent will not go under, and your insurance will be good.
– Primarily salary-based, so you are not going to have as pushy of sales, or have them sell you something you do not need.
– Direct access to the reinsurance market, thus you can renew etc. with no hassle.
Non-Captive Agents
In direct opposition to captive agents, non-captive, or independent agents, represent multiple insurance companies and work on behalf of the client to find them a policy that works for them no matter who it is through.
Non-captive agents receive the majority of their earnings through the commission of policies sold, although they may also be compensated by their sponsored agencies with some sort of salary if they meet quotas etc.
While some non-captive agents are completely independent of a primary company, most non-captive agents report chiefly to one company, while still maintaining more selling freedom than captive agents.
Benefits of using non-captive agents:
– Because they are not tied to one company they have the ability to compare price, product and service amongst a variety of insurers, and get you the right product, no matter who it is from.
– Ability to sell a policy through another insurer if a primary insurer cannot write the policy. Thus, you can once again find the policy that is right for you.
Drawbacks to usingnon-captive agents:
– Because they have to use their personal resources to start their business this means they may more aggressively try to get you to buy large insurance packages.
– Primarily commission-based, so once again there is more pressure in the sale.
Both captive and non-captive agents will be able to provide you with insurance that should meet your needs, one may offer more choices, but have higher pressure sales than the other. So it is up to you!