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Captive Agent v.s Insurance Broker, Which is better?

There is often confusion surrounding the differences and benefits of being a captive agent vs an independent broker. We are here to break it down for you and provide you with insight into some of the pros and cons for each one.

What Is A Captive Agent?

Captive insurance agents, also known as exclusive insurance agents, are contracted with only one insurance company and sell only their insurance policies. The benefits of being a captive agent are that the insurance company typically supports their agents and receive conveniences such as office space, a support staff to assist with administrative work such as processing paperwork. Captive agents also receive leads directly from the insurance company. The cons of being a captive agent are that you are limited to selling plans from one insurance company. This means you are unable to offer your clients plans from different carriers that might be more beneficial for them. Another con is that although you receive leads from the insurance agency, leads are distributed based on different factors and there is no guarantee of how many leads you will receive on any given basis. This is important to note when deciding which route to take in your career.

Independent Insurance Brokers/Agents:

On the other hand, Independent agents/brokers are agents that are not tied or contracted to any one insurance company. They can sell plans from multiple insurance companies and carriers. Independent brokers are contracted with multiple insurance companies. The advantage that Independent brokers have over captive agents is that they can offer their clients a wide range of different insurance products from different insurance companies and carriers. The downside of being an independent agent is that depending on the insurance company, you may not be able to sell certain policies that insurance companies prioritize for their captive agents. Also, without the backing of an insurance company, brokers are responsible for paying their own business expenses and overhead.

Compensation Differences Between Independent Brokers and Captive Agents:

Now let’s get down to the nitty-gritty, compensation! What are the differences in compensation between the two? The main difference between the two types of agents is in the commission structure. Often, Independent agents or brokers make a greater commission per sale, sometimes earning up to 50% more on commission than a captive agent. Although captive agents make less on commission per sale, they have the stability of a salary in addition to the commission.

All-in-all which route an agent decides to take is a personal decision. It’s important to be informed and make an educated decision when choosing your career path. We want to hear about your experiences! Share with us in the comments below.

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