Understanding The Difference Between Captive and Independent Insurance Agents - Which One Is Right For You?

What is an insurance agent?

An Insurance Agent is a representative of both the insured and the insurance carrier(s). They have a fiduciary responsibility to both the insured or client as well as the carriers who allow them to offer their products and services. 

Captive vs. Independent Agents

Captive or Exclusive agents have a contractual relationship with one insurance carrier. They typically can only sell products and services through that particular carrier, or are extremely limited and only able to offer alternatives in select situations. Some examples of popular Captive carriers would be State Farm, Allstate, and previously Nationwide. Exclusive agents have the advantage of being the only agents able to offer products or services for that particular carrier. The disadvantage is when a client is not an exact match for that carrier, agents can find it more difficult to provide their client with the proper coverage or product. 

Independent Agents are not contractually obligated to one particular carrier and therefore can provide products and services from multiple carriers. Independent agents have the ability to match their customer to a carrier in their portfolio, based on factors like coverage, underwriting guidelines and pricing. They also have the ability to help a client change from one carrier to another when the situation calls for it. 

What about insurance brokers?

Technically an insurance broker is someone who represents their clients without being appointed by an insurance carrier. They usually charge a fee vs getting paid a commission.  Insurance brokers are rare at the customer or retail level. Most Insurance Brokers are found at the Wholesale level. 

Typically speaking, when some uses the term insurance broker at the customer level they are actually referring to an Independent Agent. 

Which Type of Agency are we?

As of today, Lines Insurance & Financial Services is now an independent agency, meaning we get to continue partner with Nationwide, a top national and multi-line carrier; while, adding additional carriers to our portfolio. We can now offer more options to our clients and that is a good thing! We also can utilize additional systems and technologies to provide a better level of service that was not previously possible.