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Captive Agent vs. Independent: What Are The Differences?



There are two broad categories of insurance agents: “Captive” agents who represent one specific carrier, and “independent” agents who represent multiple carriers. Their experiences overlap, but a captive agent considering a move to the independent side can expect some significant differences.

A captive agent is generally limited to offering the products of the one carrier the agent represents. The contract with the carrier may permit limited access to alternative markets, but the agent’s fortunes rise and fall primarily based on what the carrier offers.

Conversely, an independent agent may have a plethora of carriers from whom to seek coverage. That number will vary depending on the class of business (there may be a lot of competition for property insurance on law offices and very little for automotive body shops), but an independent has more alternatives than does a captive. An independent even has the ability to seek coverage from companies the agent does not represent, using wholesale and excess and surplus lines brokers.

A captive agent may be accustomed to formal training programs. Terry O’Reilly, a former captive agent and now president of Insurance Pro Agencies, an independent agency network, says, “In my opinion, (training) is the number one reason to start your insurance career with a captive carrier.” Joe Totah, who was a captive agent for Farmers Insurance and who now heads Strategic Agencies, LLC (the publisher of says captives get some role playing and practicing in addition to classroom work. Mike Stein, an agent in Austin, Texas who transitioned from captive to independent, mentioned the mentoring opportunities on both sides. “You learn a lot from other agents,” he says.

All agreed that formal training is less common on the independent side. “For the most part, being independent you either need to have experience or willing to take the initiative and attend a school on your own,” Totah says. “Going at it cold is not a good idea.”

O’Reilly and Totah say that captive sales managers may accompany new agents on early sales calls and give them feedback on their presentation and closing techniques. Formal sales training is not standard in the independent world. “You learn by doing,” Stein says.

In either environment, it is largely up to the agent to develop a sales prospect pipeline. Captive carriers may provide some leads, O’Reilly says, but agents shouldn’t depend on them. Whether you are captive or independent, Stein suggests making a long list of people you know. “If you have 1,000 people to talk to, you’ll do well.”

Regarding automation, captive companies provide the software, though Totah says the agents may have to purchase the computers. O’Reilly says it doesn’t take long to master a captive company’s technology, since that company is the only one the agent is working with. “The quality varies by carrier, but the training and support are readily available.”

Independent agents must purchase their own systems. Stein feels the software available to independents is superior to those of captives, especially the rating systems. O’Reilly says the systems are not overly complex: “There is a learning curve, but it isn’t long before agents are able to interface with them smoothly.”

Captive companies provide varying levels of financial support for agents, depending on whether the agents are employees or contractors. “They all have startup assistance, including startup bonuses based on production,” says Totah, “but this eventually goes away after two or three years.” Independent agencies, as self-owned businesses, have higher expenses and must generate revenue to cover them.

On the other hand, independents receive larger commissions. “In the end,” Totah says, “an independent agency that has reached scale should have higher net profits for a similar premium volume captive agency by perhaps 10 to 40%.”

So which is better? Totah says captives give “ongoing hand-holding,” but “agencies have a greater opportunity as an independent to do more things, have more flexibility and earn more.” Stein cites statistics showing that independents have better closing ratios. “If everything else is equal, you should be able to do better as an independent.”

More training and support versus greater sales opportunities, flexibility and long-term earning potential. The side that provides an agent with the best comfort level is the best fit.

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