Who am I Talking To? Making Sense of Independent vs. Captive Agents

Shopping for insurance can be a daunting task. Finding professional help with needs assessment, coverage comparison, and the translation of all that fine print is a necessary step for many--but deciding who to talk to about your insurance needs can present its own problem.

Captive and independent agents are both state licensed insurance professionals who use their education and experience to assist customers to find and purchase insurance policies. They are available to help customers in finding coverage, explain the features of various plans, and facilitate the filing of claims.

That said, while their basic functions are similar, captive and independent agents have different relationships with insurance companies and the customers they work with--differences that have an effect on the services they render and the products they are able to present. The choice between the two is best made with full knowledge of what those differences are, and how they are likely to affect the policies and services you are likely to receive.

What is an Insurance Agent?

Simply put, an insurance agent is a representative of an insurance company. Agents enter into contractual relationships with the carriers they represent, which empower them to enter into binding agreements on the insurance company’s behalf. This means that insurance agents are able to sell policies directly to the buyer.

Along with the sale of policies, agents are able to assist customers with needs assessment, explain the features of various plans, and facilitate claims processes. Because the agent receives payment through the insurance company, these services are rendered at no additional cost to the customer.

Captive vs. Independent Agents

Insurance agents may work for as few as one company, or as many as 100. Captive agents are contracted to a single insurance carrier, and may even be salaried employees of their particular company. When approached by customers, they are only able to provide information on and sell policies from that insurance carrier--even when that product is not the best priced or most suitable to their customer’s needs.

Independent agents represent a number of insurance companies and are able to present their customers with products from all the companies with which they do business. Rather than being stuck in the position of a salesperson, selling the buyer on a given company’s products, independent agents act as specialized personal shoppers--searching out the policies that fit their customer’s needs the best, at the lowest price available.

Making the Choice

The choice between working with a captive or independent agent largely depends on the customer’s needs and knowledge base. Customers who have a high degree of confidence in their understanding of the insurance market--and who have already identified the carrier they would like to do business with--may find a captive agent to be a good fit. On the other hand, customers who wish to shop around and entertain options from a variety of companies will appreciate the flexibility that an independent agent brings to the table.