Comparison of Independent and Captive Insurance Agents

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.

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.

References:

1. How Insurance Agents and Brokers Make Money - (http://businessinsure.about.com/od/agentsandbrokers/a/agentnbroker.htm)
2. Term Life Insurance Quotes Give You Details About the Policy - (http://EzineArticles.com/?expert=Delnaz_Thompson)
3. The Roles and Responsibilities of a Life Insurance Agent - (http://ezinearticles.com/?The-Roles-and-Responsibilities-of-a-Life-Insurance-9. Agent&id=3514459)
4. Roles and Responsibilities: A Delicate Balance - (http://www.irmi.com/expert/articles/2002/neuschaefer04.aspx)

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