Most consumers are not aware of the difference between a captive insurance agent and an independent insurance agent.
A captive insurance agent represents one insurance company and is usually an employee of that insurance company. An advantage, to the insurance agent, is that he/she only has to focus on the products and services of one insurance carrier. Operating the business can be more streamlined and efficient as the captive agent does not have to deviate from their singular business processes. State Farm and American Family Insurance are two examples of insurance companies that distribute their policies only through captive insurance agents.
An independent insurance agent is free to represent any insurance carrier he/she chooses. While representing multiple insurance companies can make operations more complicated than that of a captive agent, the independent agent can provide the client more options. If, for any reason, the client chooses to switch insurance companies for better rates, coverage or service, the independent agent can search multiple insurance companies to find the best fit for the client.
We are inundated with commercials from insurance companies represented by captive agents. If you watch sports, State Farm and American Family run commercials seemingly every 5 minutes. Ugh! Because of their huge marketing budget, captive carriers tend to have better brand recognition. However, when it comes to meeting the needs of individuals, families and businesses, the independent agent is able to better customize an insurance plan offering better rates and coverage options. When purchasing insurance, I highly recommend you consult with an independent agent.
About The Author: With over twenty-five years experience, Pat Thompson, CPCU, is a respected veteran of the property and casualty insurance industry. His commercial lines underwriting experience and independent agency ownership make him qualified to properly mitigate risk of any business.