Insurance Agents: Independent vs. Captive

by Elisa Meyer on 2017-10-25 4:53pm

Making the decision between being an independent agent, who can sell multiple companies’ products, and being a captive agent to only one company, is no small task.


The exclusive, or captive agent, is similar to a traditional employee. They receive technology, training, and support from the company they work with. They have little to no expenses relating to overhead and marketing. It’s also much easier and less time-consuming to be well-versed in the guidelines and policies of only one company. While at first glance the payout seems lower for these agents, don’t forget about the bonus structure. On top of that, exclusive agents continue to earn commissions on renewals, while agents who branch out on their own often walk away from them.

An independent agent operates more like a small business owner. While not provided with the technology and support than an exclusive agent receives, with the modern technology at our fingertips, it may no longer make a much of a difference. One of the most attractive elements of being an independent agent is the freedom and flexibility of being one’s own boss. Independent agents can set their own business hours and work from different locations.

Another attractive point for independent agents is a higher payout on policies, as well as earning renewal commissions, as long as they maintain a contract with the issuing company. These agents are able to truly look for the best fit for the client, and present them with more options from different companies. A captive agent may try to sell clients on one of the few policies they can sell even if it’s not a good fit. A drawback for independent agents, is that many of the big insurance companies only allow exclusive agents to sell their policies. These are some of the most heavily marketed companies, so the brand recognition on clients’ part is strong.


And of course, in this day and age there is a sort of hybrid agency. Hybrid agents work as exclusive agents for the most part. However, if the company they represent does not have a comparable policy to what the client needs, they may sell other companies’ policies instead.


An agent’s choice to work as an exclusive agent or an independent agent largely depends on how they want to run their business. How much support they desire is another factor. However, our culture is increasingly based on choice, and consumers have the choice not to work with an agent at all. A study by JD Power found that in 2015, 47% of consumers bought insurance policies via internet or call center. This could be a result of the ease of purchasing a policy in your pajamas,  or a result of having all the choices, with none of the sales pressure or company limitations.


Whatever business model an agent chooses, the customer should always come first. Part of serving the customer is knowing the industry and the options they have. As the insurance industry changes, it’s important for agents to keep on top of those changes and be well-educated.


For licensing, as well as continuing education courses in insurance, be sure to check out At Your Pace Online’s course offerings.