Pros and Cons of Being an Independent Insurance Agent

Independent Insurance Agents are those individuals who are not bound by a single independent company but can sell policies from multiple companies. Independent insurance agents have to be forthcoming regarding a lot of information and clauses related to an insurance policy, which is why they are preferred by customers. Here are some of the advantages and disadvantages of being an independent insurance agent: 

Advantages and Disadvantages of being an Independent Insurance Agent

pros and cons of independent insurance agent

Advantages of being an Independent Insurance Agent

Preferred by customers

The biggest difference between a captive agent and an independent agent is that while captive agents represent the company, by principle, independent agents represent the customer. Independent agents have the resources to search across different companies selling policies to find the best option. Independent insurance agents have to be forthcoming regarding a lot of information and clauses related to an insurance policy, which is why they are preferred by customers.

Bigger policy pool

Captive agents can only sell you policies sold by their parent company. Sometimes, they can be coerced by the parent company to push certain policies towards their clients even though they may not be a good fit for the customers while independent agents can shop around for you to find the best fit. Also, the policy pool for a captive agent is limited to only a single carrier, while an independent agent has links with multiple insurance companies.

Disadvantages of being an Independent Insurance Agent

Building a partnership with big companies

One of the major issues regarding being an independent insurance agent is that big insurance companies usually prefer to have captive agents. And if not captives, they are looking for independent agents with several years of experience in the field. Thus, newer independent agents are usually only welcomed by small, often unheard insurance companies. Thus, before playing in the big leagues you need to get some experience and increase your books by intense marketing campaigns.

High upfront cost

Since non-captive agents do not belong to any particular company, they receive minimal support from companies. Captive agents usually receive assistance in training and resources if they bring profit for the company. And independent agents usually have to accumulate these resources on their own, which may be one of the reasons that they can’t stay in business for long.

It can cost anywhere between $5000 to $40000 to set up an independent agency. There are some essentials for insurance business such as Agency Management System, Financial Management system, support staff, brick and mortar office, marketing expenses and more to start your own agency.  

Bottom Line:

  • Independent Insurance Agents are those individuals who are not bound by a single independent company but can sell policies from multiple companies.
  • Independent insurance agents have to be forthcoming regarding a lot of information and clauses related to an insurance policy, which is why they are preferred by customers.
  • Starting an independent agency is not cheap as it can cost anywhere between $5000 to $40000

 

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