The Role of an Independent Insurance Agent

Insurance Agents With Options

A couple discussing coverage with an independent insurance agent in an office setting.
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There are three different methods to buy auto, property, and health insurance. These methods include going through independent agents, using captive agents, or buying directly through the internet. There are pros and cons of using each of the buying options. A basic understanding of the differences between the three methods is a good place to start.

Ways to Purchase Insurance

The captive agent works for only one insurance provider and is paid by that company. Buying directly—online or on the phone—you will deal with the insurance provider. Independent agents have more freedom to offer plans that better fit their clients than do other types of agents. This flexibility makes these representatives a strong competitor in the insurance industry.

Independent agents have been around since 1896. Independent Insurance Agents & Brokers of America (IIABA) helps to build the structure of independent agencies. More than 7,100 independent agencies are selling on behalf of 43 different insurance carriers across the U.S.

Pros and Cons of Independent Agents

Quick quotes from multiple insurance carriers are one of the major benefits of independent agents. If you are shopping for insurance, independent agents are a great place to start because they can check several different companies’ rates all at once. The more companies checked equals a greater chance of finding the best rate for you and your family. Working with an agent who is not solely employed by one carrier is nice because you can get unbiased advice. The time-saving factor is huge because you only have to provide your information one time.

A good independent agent can be proactive when it comes to your insurance rate. They can get a head start when it comes to rating changes. For instance, if an agent knows one of their companies’ rates is increasing, they can start looking for a better deal before the increase takes place.

The ability to retain the same agent even if you switch carriers is another perk of having your insurance with an independent agent. A strong relationship can be built with your independent agent, and if your rates start to creep up, your agent can find you lower rates without ever switching agents. Many people put up with higher rates because they are not comfortable leaving their trusted agent. Independent agents give their clients more options.

An independent agent will often file your claim with the parent company on your behalf. Personalized customer service is a high priority for independent agencies. Having an agent makes it so you don't have to deal with the automated 800 numbers quite as often. Plus, an agent can give you advice before filing a claim.

However, since they represent several companies, the independent agent must be knowledgeable of several different carrier products. Also, each carrier may set monetary quotas for continued representation.

Pros and Cons of Captive and Direct Insurance

The main benefit of buying through a captive agent is that you will avoid a policy fee—charged by many independent agents. Captive agents have an in-depth understanding of the provider’s products and can align those products to their customer’s needs. However, captive agents have to roll with the punches of the carrier rate increases for the company they represent.

The captive agent is paid by the company they represent. In some cases, the pay is strictly a salary and in other cases, it is a salary plus a commission. If you have time to shop around and call several captive agents, you may find price differences for the coverage you want. In certain business industries, some providers will offer policies customized to that industry. You may also get multi-policy discounts by working with a captive agent and using a single company.

A primary benefit of buying directly from an insurance provider means you have near-immediate access to the coverage. Since you are just a voice on the phone or an IP address there is little customer service or customization available.

Carriers Selling Through Independent Agents

The list is a good portion of independent insurance carriers. Find a thorough list of carriers at IIABA. If you are looking for an independent agent, look for the Trusted Choice brand which is owned by Independent Insurance Agents & Brokers of America.

  • Allied Property and Casualty
  • American Strategic Insurance
  • Auto-Owners Insurance
  • Chubb
  • Cincinnati Insurance Company
  • Citizens
  • Colorado Casualty Insurance Co.
  • EMC Insurance Companies
  • Frankenmuth Insurance
  • General Casualty Insurance
  • Grange Insurance
  • The Hanover Insurance Group
  • The Hartford Insurance
  • Integrity Insurance
  • Ohio Casualty
  • Peerless Insurance
  • Penn National Insurance
  • Progressive
  • Safeco
  • The Travelers Companies
  • The Republic Group
  • West Bend Mutual
  • Westfield Insurance
  • Zurich North America