What is Captive Agent? Definition of Captive Agent, Captive Agent Meaning

The captive agent is an insurance agent who, unlike the traditional insurance agent or independent agent, works and performs his duties for a single company. This, usually, in exchange for better working conditions.

In other words, we are talking about an insurance agent, licensed to practice, who works for a single company.

Unlike the independent agent, he usually receives a fixed salary plus a series of commissions for the sales made. In addition, they usually have both a physical office and equipment provided by the insurance company.

In short, it is an agent who works exclusively for a certain insurer, so it can be considered an employee of that insurer.

And we must know that in the world of insurance, generally, there are several professional profiles that we can find when they offer us a policy.

Along with captive agents, we find traditional insurance agents or independent agents. These independent agents are not employees of the company as such, since they usually work for multiple companies.

That is, freelance profiles that, in exchange for commissions, offer products from various companies, which will subsequently pay you a commission when the sale has been closed.

But, let's see more about this interesting concept!

Characteristics of the captive insurance agent

Among the characteristics of this type of professional profile, the following should be highlighted:

  • The captive agent can only offer insurance from a single company.
  • He is, for all intents and purposes, an employee of the company.
  • Unlike other types of profiles, they usually have objectives that they must meet.
  • In general, they usually have an employment contract and not a commercial one, like the independent agent.
  • They have a fixed salary, as well as a variable one. The latter, through commissions for closed sales.
  • The insurance company usually equips you with tools and equipment to do your job.
  • In the same way, they tend to have a physical space (office) provided by the company.
  • Sometimes they also have a company car.

The independent insurance agent

The opposite profile to the captive agent in an insurance company is the independent agent.

The independent agent, unlike the captive agent, is not an employee of the company, so they can offer their services to many insurance companies. That is, you can sell insurance from all the companies that allow it, from which you will charge commissions for closed sales.

Compared to the captive agent, the independent agent also does not have an employment relationship with the insurance company, since their relationship is purely commercial. That is, it sells company insurance and charges for sales.

Well, we must know that independent agents do not charge a fixed salary as captive agents can. The independent agent receives his fees based on the sales made for each of the insurers for which he works. In other words, it only charges commissions for sales made.

Advantages and disadvantages of being a captive agent

As we must know, it is not that it is better to be a captive agent than an independent agent. Each profile has a number of advantages for the agent, as well as a number of disadvantages. Depending on our interests, we may be more interested in being a captive agent or an independent agent. In a way, it is a matter of preference.

Therefore, we are going to see what are the main advantages of being a captive agent, as well as the disadvantages that could lead us to choose the independent agent option.

Advantages of being a captive agent

Among the advantages of being a captive agent, the following should be highlighted:

  • They are employees of the company, so there is an employment relationship.
  • This allows you to enjoy the rights acquired with the State for being an employee of the company.
  • Usually they have a fixed salary, which is supplemented with commissions based on the sales made.
  • Also, they usually have an office, equipment, as well as a company car to carry out their daily tasks.
  • They have training plans covered by the company, which allow you to update your knowledge.
  • In summary, although it generates a certain dependency, it offers greater security, while the risk is assumed by the insurance company.

Disadvantages of being a captive agent

Finally, among the disadvantages of being a captive agent, the following should be highlighted:

  • They can only work for one company.
  • For this reason, they do not have other income streams.
  • They usually have objectives that they must meet, unlike the independent agent.
  • They do not have the independence that comes with working for many companies.
  • Working for a single company, in the same way, reduces the chances of a sale occurring.
  • Therefore, the potential income in commissions for closing sales is lower.
  • In summary, although it offers greater security and stability, the agent's business is less diversified, while at the same time it has less independence.