Captive agents work only for one insurance company, ie. unlike the independent agents they don't have the freedom to sell the products of different companies to serve the needs of their clients.
Some of the fresh agents prefer to start as captive agents as it promises them a fixed earning in the form of salary from the insurance company. Also he/she may be allowed to use the company infrastructure and leads to start his business. This is an added benefit for the novices of this trade.
An agent can later become an independent agent, once he/she gains enough experience in selling insurance and has built a book of business to rely upon.
Well, from the customer's point of view, he may be better off by consulting an independent agent since the independent agent will be able to offer him suitable alternatives. With an independent agent the customer can also enjoy the experience of ‘shopping around'.
An independent agent normally has contracts with several insurance companies, and is authorized to sell their products. He can find the best deal for your money.
Often the terms independent agent and insurance broker are used alternatively, but there is a slight difference between these two. An insurance broker functions more or less like an independent agent, only he earns in terms of brokerage fees instead of commissions.
A captive agent can also work in the form of an independent agent by earning commissions form the sales generated by him/her or (s)he can work as a full time employee for the company.
A captive agent has the advantage of learning the nuances of the products he sells and also of the products of his competitors, while dealing with multiple insurance companies may pose difficulties in learning the features of all the plans. Normally, an independent agent tries to offer you a product that will suit your budget.
A captive agent can also choose to operate in the multiple insurance lines of the company. However, if you opt to become an independent agent, you may prefer to operate in the field of life and health over the P&C line.
Hi murph, both the captives and the independent agents face benefits and challenges in their careers.
While the captive agents have to work within the rules and regulations of his parent company, the independent agents can go to an extent to compare the products and the prices of different insurers and also can cross sell when required.
The independent agents have to take the responsibility to start their own business and have to bear the expenses of running an office. The captive agents can enjoy the support and training of the insurance company at the initial phase of their career, which may help them to set their foot firmly in the industry.
A captive agent may earn fixed remuneration from the insurance company which is an essential support for an aspiring agent, while an independent agent might have to depend upon the commission that he is generating from the businesses. Moreover, a captive agent may also enjoy the employee benefits offered by the company.
However, the success of an agent may depend solely upon his/her ability to sell. Also, (s)he needs to choose his/her line of operation carefully. The life and health policies may generate more commissions than the P&C policies.
I have been in the business a couple of years an have seen the best and worst of both sides of the coin.
Most captive (L&H) provide you with leads but the drawback is that these leads are controlled by your upline. The ugly side of this is that many of the captive companies pay the management a bonus if a new agent hits a certain production level after appointment. (these are straight income to the managers, not advances)
What I have seen happen is that starting out newer agents get pleny of leads until they hit that production level only to be starved of leads afterwards. This system makes it more profitable for managers to have more agents go in and out their doors.
As an independent you are own your own as far as leads go.
One other drawback to captive is that if the one carrier suffers any problems (financial, bad press, policy prices become to high to be competitve) you are stuck with the one carrier.
As an independent you can easily switch carriers but you have to learn the new products. _________________ Thinking about becoming a health insurance agent or just getting started out as one?
A captive agent also has the option to get exposed to better learning experiences & expertise in the company of his senior colleagues. He would get all the time to observe the finer elements of "selling", "up-selling" & "cross-selling" at one place & thus compare to check which of the expert-tactics would suit his product delivery. With the passage of time, he would be able to develop his own trade-secrets comprising of one or more of such target-oriented speeches.
It is true that all this while he would not need to worry about the availability of prospective customers, since a study-oriented team of professionals would conduct economic surveys to generate quality leads for him. So he would automatically get an edge & ample time to develop networks based on mutual relationships with his clients. This network could be truly ultilized by him on a later date when he'd grow up to work independently. ArindamSenIndies
So you think that a person would have a better advantage being captive?
Well, that's a tricky question to answer.
There are loads of insurance agents doing great with their independent agencies. In fact, I'm sure that most of the agents will vote for being independent, as this gives them greater opportunity to work on their own terms.
An independent agent isn't answerable to any insurance company in particular, and can sell policies which suit his client's best interest.
An independent agent has greater scope to switch between the lines of insurance as well, and also between different companies.
An independent agent can earn to any extent with his own ability, though he may only earn in the form of commission, whereas the earning prospect of a captive agent may get limited to the receivables from the insurance company.
IMO the success depends largely upon the ability of the insurance agent
All of the above makes one thing clear to me, that the senior independent agents have more to do in terms of their volume of work. They would even have more responsibilities towards maintaining their goodwill in place.
Once the senior independent agents have developed their own giant networks & got their names established in the world market, they would no more remain a competitor for their once senior colleagues who have continued as senior agents.
The independent agents have a much wider scope to operate on & trudge through steeper risk-patterns. They would come across global challenges that broaden their scope of operation as well as knowledge & vision. ArindamSenIndies
I would never want to be a captive agent again. Being a captive agent was a good and valuable experience. I'm glad that I was a captive agent at one time. I'm also glad that I went to kindergarten. I don't belong there today.
Captive agents get the benefit of a lot of structure and training. However, they get a myopic view of the industry because they focus on their company and its products.
I have my own agency now. It is a very small agency that consists of just myself and my son. I love it. We represent all the carriers offering health insurance and that are approved by our state's insurance department. That means that if any body can offer a particular Connecticut-approved product, we can offer it to. This means that we never get beaten based on price or benefits.
This allows us to focus on giving good advice and working on our prospecting and sales skills. We don't have to tap dance around price issues or come up with creative ways to justify a price that is higher than something a competitor can offer.
I'm glad that I got the training that I received as a young agent working for Met Life and Mutual of Omaha, but I believe that an independent agent does a better job for his or her agents than an independent agent.
The only benefit I could think of for going captive is that you can get start up income. That doesn't exist in the independent world. I would not want to be a captive agent either, no offense to those who are captive. I got in to insurance because I grew tired of the companies for which I worked owning all the revenue from my business. Now I own it. _________________ www.insureswohio.com www.retirementswohio.com
Training and start up income are very important. I have a lot more respect for the companies I used to work for now that I have to proved both for my son.
One vital factor that you'd need to consider for setting up an independent business is the right kinda capital flow. Remember you'd be a fresher amidst a lot of competitors in the market..so you'd need to have a stabilized funding source in order to meet the unforeseen challenges ahead. Also, try & maintain a good relationship with your old colleagues (while you'd been a captive agent). ArindamSenIndies
My friend, it is truly important that you get along a good market survey that extracts the needs of people reigning high in the industry today. But I'd also suggest that you try & get a good survey of the current availability trends with your fellow competitors before you invest on it!
Remember that the Global insurance industry is dynamic & a lot of customized policy versions get introduced in the market every now & then!
Regards, Evan
