Comparison of Independent and Captive Insurance Agents
Advantages of independent insurance agents:
- Such insurance agents are usually associated with more than one insurance agency (ies) at the same time.
- They can offer their clients a wider range of insurance products and services to choose from.
- Independent insurance agents have greater options to suit an individual’s needs and allow the individual customers to compare products from amongst a wide range of insurers (or insurance companies).
- They have no mandate or compulsion that they need to sell products of a particular company only.
- They are entitled to receive commissions from all the insurance companies whose products they can promote and sell to their clients.
Disadvantages/challenges of independent insurance agents:
- They may tend to promote only those insurance products and services including companies that fetch them higher commissions.
- They may not always keep the benefits of the insured’s family as uppermost priority in their minds, since they are mainly commission based.
Advantages of captive insurance agents:
- Such insurance agents are mainly salary based.
- They draw their resources from the parent company, wherein they are employed.
- Captive insurance agents may have a direct access to the reinsurance market.
- They are entitled to wider employee benefit options.
- The interests’ of the policyholder and his/her family members is topmost in his/her mind so that they can derive maximum benefit out of the insurance products and services sold by him/her.
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Disadvantages/challenges faced by captive agents:
- They may be prohibited from selling insurance products and services other than those of the parent company.
- There may be loss of clientele if the parent organization decides to discontinue selling a certain insurance product, as a result of it being unprofitable or any other reason.
Agents may be forced to promote certain policies over others by the parent insurance company.
