Captive agents are licensed insurance agents who only promote the offers of a single insurance company. They may work as full-time employees or independent contractors, but can only sell the types of coverage offered by their sole provider. This arrangement benefits both the agent and the insurance company.
The captive agent is a fully licensed insurance agent who promotes the offers of a single insurance company. Captive agents may choose to function as independent agents or be associated with an insurance company as full-time employees. In either case, the captive agent only sells the types of coverage offered by the sole insurance provider.
While the captive agent can be found as a full-time employee or as an independent contractor, captive agents are more commonly directly connected with an insurance company. Along with the option to be a full-time employee of the company, insurance agents may choose to negotiate an employment agreement that allows for ample commissions on the sales of policies provided by the insurance company. In exchange for the enhanced commission rate, the captive agent will agree to only represent the coverage offered by the insurance company. This is in contrast to the common practice of independent agents, who are often authorized to write policies for several different insurance companies.
One advantage of dealing with a captive agent is that he or she is likely to understand all the nuances of each type of coverage offered by the company. Since the agent does not handle other insurance companies, it is important for the agent to be able to convince consumers that the company offers the best insurance options on the market. This can only happen if the agent has a thorough understanding of what each offer level will and will not provide in the form of coverage.
Insurance companies also benefit from captive agent arrangements, especially when they involve independent contractors. An independent agent will work on commission, which means the insurance company does not have to extend a salary or benefits package. In exchange for the higher commission rate, the company has more people working in the consumer market to find new business with less of an initial investment.
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