Independent Insurance Agent Vs Captive Insurance Agents


Hello fellow agents and prospective Insurance Agents! If you are currently in Insurance Sales or are considering a career in Insurance Sales, the following insights may be helpful in making sure you are on the right path for a long and rewarding insurance Career. It should also help you decide what type of contracts, Independent or Captive, you feel better fit your needs and objectives right now at this point and time in your career.

When I started in Insurance Sales 28 years ago, I was recruited by a Company that only offered Captive Sales Contracts. I did not know that Independent Contracts existed let alone the pros and con’s between them. I spent the first 9 years of my career selling, recruiting and training under a captive contract. I have sold, recruited and trained agents the last 18 years under Independent Sales Contracts.

One of the big concerns I experienced over time working under a captive contract with one company was not having enough product selection. There were several periods of time when certain products we offered were simply not competitive in the marketplace.

This severely limited our ability to provide solutions to many prospective customers. I have found over the years that most captive companies usually only have two or three competitive products at a time. They usually are focused on one or two niche markets. This limits your cross selling opportunities when you’re not allowed to pick up other contracts. As an Independent Agent you are free to contract with many different companies. This can be a problem though because many insurance agents that contract with to many companies at a time begin to lose focus. There will be times, however, when you may want to change markets or add another company that has a very competitive product. You will need to be an Independent Agent to do that.

The other big concern I had working under a Captive Contract was that I did not own my block of business. Another phrase for ownership of your block of business would be “having vesting rights on your block of business.” The company I worked for required you to be their 15 years before you had 100% vesting rights on your block of business!

When I left after 9 years I was only 40% vested. That means I did not receive 60% of my renewals on my in-force policies when I left and became an Independent Agent. Again, I did not know nor was I told that there were other opportunities to sell Insurance and have 100% vesting rights all your sales from day one! I learned the hard way. This is also why it took me a long time to get up the nerve to make the move because I knew I would lose a big chunk of my renewal income. There are a lot of agents that work for Independent Agencies that sell multiple companies that don’t offer vesting rights. So when the agent leaves the Agency still gets all the renewals on the business. This may not be all bad depending on the other support and services that Agency may be offering the Agent.

Generally speaking, another difference you will notice is that Independent Agents commission schedules are usually higher then that of Captive Insurance Agents. For example, when I sold as a Captive Agent I earned 20% commission our Health Insurance products and 55%-65% commission on our Life Insurance products. When I moved over to the Independent Agent Contracts I started earning 25% commission on my Health Insurance Sales and 90%-100% commission on my Life Insurance Sales.

Traditionally one of the advantages with Captive Companies was that they offered more training and support for a new agent entering the business. But nowadays there are many great MGA, NMO, IMO and FMO Agencies that offer all the training and support that traditional Captive Companies offer. Plus you still get top commission contracts, Immediate vesting rights, multiple company portfolios, Lead support systems, etc.

Well, once again we hope that this information has been helpful to you. My you not have to learn certain things the hard way as I had to early on in my Career. By not having first hand knowledge of the pros and cons of Independent vs Captive Contracts it cost me a lot of time and money. An Insurance Sales Career can be very rewarding and your journey to success can be much quicker if you are starting from a point of knowledge!

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