A friend of mine sent me an email asking if I’d review her car insurance. After replying I’d be honored to, she asked me a question which comes up once or twice a year. Her question was, “Do I charge for my services?” This question is usually asked by people who’ve never worked with an independent agent before talking with me. Other people, have asked this, as well as, a follow up question, “Will I still be their agent, once I write their policy?” Let’s look at the two categories of insurance agents, how we are alike, how we are different, and the answers to both questions.
Agent Types: There are two types of insurance agents, independent and captured. Independent agents work with several companies such as Travelers, Safeco, Encompass, Progressive, Kemper, and more. We comparison shop among our carriers for the best rate on your home, car, life, or business insurance. Captured, or dedicated agents, work with only one company such as State Farm, Farmers, Allstate, Liberty Mutual and Nationwide, and they write business for just the company they represent.
The lines become blurred in some instances. For example, Farmers has purchased a couple of different companies, Foremost and 21st Century, over the past several years, giving them the ability to consider options from among the family of Farmers companies. Nationwide agents may be able to write “brokered” business policies for businesses outside of what their underwriters are willing to write.
Agent Similarities: Insurance agents, whether independent or captured, are small business owners. We own our agency and work to provide the best insurance option we’re able to present. In addition, we write similar insurance policies such as home, auto, life, and business insurance and then service our clients as needs dictate. Client servicing includes policy changes such as adding a new car or driver, changing coverage, policy reviews, and providing advice.
In most cases, neither group is employed by the company or companies we represent. We earn a commission based on new and renewal business. The commission is usually a small percentage of the annual premium or rate charged on a home or auto policy.
Agent Differences: The biggest difference between us is the number of companies we represent. Independent agents may represent up to a dozen or more different companies providing us with greater flexibility in searching for the best coverage at the best rate. Captured agents do not have this opportunity as they are dedicated to their primary company.
I’m not aware of any agent, either independent or captured, charges a prospective client to review or quote their insurance. This is a part of our service offering to people who are referred to us. If we’re able to provide a better or less expensive solution, we do. If we’re unable, I always recommend the client stay with their current provider and we will review it again in 6 months or a year when the policy renews.
Once a policy is written, I continue to be a client’s insurance agent. As outlined above, part of the work of any agent is to review a person’s policy or policies each year and provide ongoing service. In addition, I believe part of the service I provide is to be a client’s insurance advisor. This means I answer questions, provide guidance, and offer coverage as a client’s needs change.
I have been both a captured agent and an independent agent. I like having options I can consider for each client. It means I operate in their best interest and they like that too! Do you have a question, comment or experience you’d like to share with me? Please do so on my Facebook, Google +, and LinkedIn pages. I’d love to hear from you!