In the insurance world, insurance experts can take many forms. There are many different types of “insurance experts” that work with insurance companies, including the topic of this blog – i.e., captive insurance agents and independent insurance brokers – but also insurance underwriters, claims adjusters, actuaries, risk managers, risk analysts, private investigators, insurance specialists, claims clerks, insurance investigators, and more.
While both captive insurance agents and independent insurance brokers have a wealth of knowledge in the insurance industry, there are some key differences between them worth noting – and numerous differences to be noted if you’re planning to either step into the world of insurance as a career, or to purchase insurance for yourself. Let’s start with an overview of a captive agent.
What is a Captive Agent in Insurance?
A captive agent in the insurance industry refers to a professional who exclusively represents and sells insurance policies on behalf of a single insurance company. In Canada, a captive agent serves as a dedicated representative of a particular insurance carrier, providing customers with information, guidance, and assistance in selecting insurance products that suit their needs. Captive agents are typically knowledgeable about the specific policies and coverage options, the same way any insurance profession would be, but mostly in what is offered by their affiliated insurance company, allowing them to provide detailed information and personalized recommendations to clients.
Unlike independent insurance brokers who have the flexibility to work with multiple insurance companies, captive agents are bound by contractual agreements to promote and sell policies exclusively from the insurer that they represent. They act as the direct point of contact between the insurance company and the policyholders, facilitating the insurance purchasing process and assisting with any queries or concerns that may arise. Captive agents are responsible for explaining policy terms, outlining coverage limits and deductibles, calculating premiums, and assisting clients with claims procedures.
What is an Independent Insurance Broker?
An independent insurance broker, much like a captive agent, is an insurance expert who deals in the selling of insurance companies but does so on behalf of numerous insurance companies. They are a dedicated representative, not of the insurance company or companies they sell for but rather for the client – the one who is their utmost priority. This isn’t to say that captive agents are bad by any means, but the priorities are different – and there are certainly benefits to both.
Insurance brokers have broader knowledge in the various insurance products that their various represented companies offer and may be able to offer you more selection on what you want/need. Additionally, because they represent multiple companies, they can find you better rates if one option isn’t a good fit for you anymore. Since their loyalty is to you, they won’t offer biased recommendations for one insurance company over that of another.
However, the process of purchasing insurance through an insurance broker may be longer. While an agent will simply be getting you a policy from the single insurer that they represent, an insurance broker will take the time to do some comparison shopping. If you care more about getting insured quickly without time spent on getting you the best possible price, then an agent is the better option for you. On the other hand, if you want customized coverage for the best price, a broker will do the trick.
Which is Better – a Captive Insurance Agent or an Independent Broker?
Again, it largely depends on your current needs. A captive insurance agent will have more extensive knowledge of their individual insurer’s products and policies, since they only need to spend the time getting to know the single carrier. There may also be the addition of added fees for working with a captive agent, but at the same time the process is much faster.
An independent broker will give you more options, which also means a wider price range. This can mean better prices overall, but they may have less in-depth knowledge about each of the options that their insurance companies provide, since there are many more. However, insurance brokers generally don’t come with any extra fee, since they charge based on commission and that may come as a percentage of your premium which is paid for by the companies they represent.
All in all, it really depends on your needs and what you’re looking for. With some products, where there isn’t much price variation (for example, tenant insurance) it may be quicker to purchase through a captive agent and get the specific run-down on that price. But, with something like auto insurance, where there can be huge deviations in price and coverage, usually an independent insurance broker is the go-to for multiple price options and comprehensive coverage.
AssurUni is the Fastest-Growing Hub for Independent Insurance Brokers
Our company, AssurUni, which was founded in 2018, is dedicated to assisting both new and experienced damage insurance brokers in developing their own client portfolios and attaining their business goals. We are now expanding our service to prospective entrepreneurs from outside the sector who are looking for a very lucrative business opportunity with little overhead costs. We have a solid track record of training and mentoring countless broker partners since our beginning.
The insurance industry boasts stability and consistency. Throughout our operations, we have worked hard to foster success and happiness for the independent insurance partners that we work with. Whether this is your first-time stepping foot into the industry, or you’ve been an experienced broker for some years now, we’re happy to guide you through the next step of your journey. Talk with us today.