Independent Insurance Agency Vs Captive Insurance Agency: Differences and Benefits
Captive insurance agencies and independent insurance agencies are different on so many levels. It is often difficult to decide whether you should buy a policy from a captive agency or an independent agent. This article will help to make that decision much easier.
Captive insurance agencies
A captive insurance agency is allowed to sell products of only the parent company (or its affiliates). Even here, they are constrained by pricing structures and placement guidelines. The agencies may also be obliged to sell other policies from their parent companies such as life insurance or annuities. This means the agents of the captive agency can get pushy, to the extent you may feel compelled to oblige them by buying those policies. If you’re not sold on the company or policy, they have nothing else to show you, and no other companies to offer you.
Independent insurance agencies
An independent insurance agency represents many insurance companies which gives him or her an opportunity to offer a wide range of price quotes and coverage options. For example, if you wanted to buy homeowners insurance, an independent agent will be able to give you quotes from several companies that want to do business with you.
An Independent Insurance Agent will have you best interests in mind, not the insurance company. They will be better able to offer you a company and policy that fits your needs, and are not bound to only a solitary company. Take State Farm in Florida for instance. The company surrendered its certificate of authority (to sell insurance) and left the Florida property insurance market in 2009 on the back of claims that it would go insolvent by 2011 if it continued. When the company did this, it left thousands of customers in the lurch. If your insurance agent was captive to State Farm, they would have had no other option for you to choose from.
Other differences between independent and captive insurance agencies
Many independent Florida insurance agencies represent companies with insurance products best suited to that region’s geographical needs. For example, not every company offers coastal property insurance in Florida because these policies involve unique challenges. Many insurance companies also have strict guidelines on insuring older homes. A captive insurance agency may not be flexible in this regard, but an independent insurance agency will sift and sort through different companies to find the best terms.
