I was helping a young couple in January with their home insurance. They were buying their first home in Dallas. It was an exciting and terrifying time for them. It was rewarding for me to help them find an affordable solution that lowered their monthly payments from what they’d been quoted by the wife’s parent’s agent.
The wife asked me a question as we completed the application process and bound the policy for their home closing. The question she asked was:
“Do we need to pay you for your service?”
This was not the first time I’d been asked this question. Usually the people who ask this question tend to be:
- First time home buyers
- Their parents usually have a long standing relationship with a State Farm, Allstate, or Farmers agent
- I’m usually the first independent agent they’ve dealt with
The answer to her question is “No,” she did not need to pay me. It also let me know there are many people who don’t understand the difference between a “captured agent” verses an “independent agent”.
There are some differences between a captured and an independent agent including:
- Captured insurance typically works with only one carrier such as State Farm, Farmers, Allstate, and Nationwide.
- A captured agent typically is only able to write business with the company they represent. For example, a State Farm agent can only write insurance from State Farm.
- These lines are blurring slightly as insurance companies buy other companies. For instance Farmers Insurance owns Foremost Insurance and 21st Century Insurance.
- In some of these cases, the captured agent is able to write business through the other carriers the company bought, although this is not always the case.
- Independent agents typically represent a broader number of carriers such as Safeco, Travelers, MetLife, State Auto, Kemper, The Hartford, Chub, and more.
- The increased number of relationships enables the independent agent to compare various offerings from each of the companies they represent and find the best value for the client.
- Independent agents are then paid by the companies they represent when they write a policy with that carrier.
- The increased options apply to both personal lines (auto, home, renters, umbrellas, etc.), as well as commercial policies for businesses.
I have worked with captured agents and companies when I first became an agent. I never lost sight of the fact that having options enables me to best serve my existing and future clients. Instead of having to fit a client’s specific needs to a policy, I’m able to tailor the policy to meet my client’s specific needs. I love that freedom to serve my client’s best interest. In the case of the young couple, I was able to provide an excellent solution that saved them about $500 a year, and that’s what I call rewarding!
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