Captive Agents

The insurance market is known for offering well-paid salaries and commissions. It can be lucrative for people who have the knack for selling pre-need products. Professionally, there are two categories of insurance agents that applicants can go to for quotes. One category is known as the group of captive agents and the other one is for independent or non-captive agents.

A captive agent is someone who works exclusively with one insurance provider. The only plans that captive agents will sell are those from a specific insurer. There is another variety where captive agents are part of different affiliated groups connected to a parent corporation. Although, they are able to sell other brands or even types of insurance plans, their main objective to ensure high profits for the parent corporation. Since the set-up is an exclusive partnership with one company, the insurance carrier usually takes on some of the expenses for these agents. Usually, the company pays for office expenses and gives allowances to captive agents. Other benefits include life insurance, health insurance, pensions, professional growth through continued training, and membership in their credit unions.

To date, there are an estimated 5,000 captive agents all over the world, but the numbers have been dwindling over time. According to a report made by the United States Department of Labor, many insurance firms are reducing operational costs by means of decreasing the total number of hired captive agents. The current trend for insurance carriers is to rely more on the services of independent agents. Other strategies include, direct sales and marketing through mails, over the phone, and online. In spite of this current situation, members of captive agent groups insist that they are the simplest and most comprehensive media for people looking to purchase products in the insurance market. They maintain that they can offer more than what independent agents could, that is why they managed to survive for so long in the industry.

People, who would like to become captive agents themselves, must know what the pros and cons are. If you are starting with a parent company, your resources and other paraphernalia will be provided for. Many people feel more secure knowing that they will receive a salary every month and that their income won’t depend on commissions alone. This is another advantage of being a captive agent. More employee benefits can be enjoyed and they have direct access to products in the reinsurance market.

Disadvantages for this type of set-up include the prohibition of cross-selling insurance policies. At any point, the company can stop selling product lines that result in low profits. This indicates loss of clientele for many. You won’t be allowed to refer customers if a sale is not guaranteed. In line with the insurance provider’s corporate objectives, some policies might be given priority over others. This happens when a company requires agents to meet strict quotas.

For this reason, some agents prefer to be independent or non-captive. There is more freedom to cross-sell and compare different product lines. However, independent agents have to invest and use personal resources to start operations. Salaries will only come from commissions as well.