What is Independent Agent? Definition of Independent Agent, Independent Agent Meaning and Concept

An independent agent, or independent insurance agent, is a type of insurance salesperson who works and performs their duties for numerous companies. This, usually, in exchange for commissions for the sales made.

The independent insurance agent is a type of insurance agent, who works for many companies. In other words, it does not commit to a specific insurance company, but rather diversifies its offer by incorporating more companies.

In the world of insurance companies and insurance marketing, we have several professional profiles that are dedicated to marketing products of this type. Among those profiles, the independent agent and the captive agent stand out mainly.

Thus, the independent agent will offer its clients all the products, including those of various companies. Depending on the one that the client finally chooses, he will be in charge of closing the sale and collecting a commission from the insurance company. In this way, the independent agent does not commit to any particular brand, but rather diversifies its offer, being able to increase its potential profit.

This, in general, does not usually have an employment contract, but its relationship with the insurer is purely commercial. For this same reason, they do not usually have a company car, office, schedules, as well as other elements typical of a traditional employee.

In the same way, they do not have a fixed salary either. Your salary is determined by the sales made and the commissions charged to the insurers.

In contrast to the independent agent we have the captive agent. That is, an agent who is exclusively dedicated to a specific insurance company, and with which he has a working relationship with a fixed salary. It also has another series of elements typical of an employee profile and not of a freelancer, as would be the case of the captive agent.

Characteristics of the independent insurance agent

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

  • These types of agents usually work for many companies, so they offer different products from different companies.
  • This is an external profile, so you are not an employee of the company.
  • Unlike other profiles, they do not usually have objectives, but instead charge for the sales made.
  • The relationship between the agent and the insurers is purely commercial. That is, they do not have an employment contract.
  • Your salary depends on commissions, it is not a fixed salary.
  • They are usually freelance profiles, so they work independently, in their own offices.
  • Despite not being employees of the company, they can have career plans within it.

The captive insurance agent

As we said superficially at the beginning, the agent that opposes the independent agent is the captive agent.

This is a licensed insurance agent who works for a single company.

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

In short, you are an agent who works exclusively for a certain insurer, so you are considered an employee of the insurer in question.

Advantages and disadvantages of being an independent insurance agent

It is important to keep in mind that when we talk about captive or independent insurance agents, we are not talking about one profile superior to another, or one profile better than another. Each of them has a series of advantages and disadvantages. Therefore, the decision will always ultimately depend on our interests and our preferences.

Advantages of being an independent insurance agent

Among the advantages of being an independent insurance agent, the following should be highlighted:

  • They can offer products from many companies, so the probability of the sale closing is higher.
  • By being an independent agent, you can diversify the business, not depending exclusively on a single company.
  • They do not have objectives, nor schedules, nor offices to which they must go by obligation.
  • They can always offer the product that best suits the customer, since they are not forced to sell the product offered by a certain company.
  • In summary, although being a captive agent offers more security and stability, the independent agent has greater independence, while their business is more diversified.

Disadvantages of being an independent insurance agent

Likewise, among the disadvantages of being an independent agent, the following should be highlighted:

  • They do not have an employment contract, as they are not employees of the insurance company as such.
  • They also do not have a fixed salary.
  • They do not have an office or computer equipment offered by the company.
  • Unlike the captive agent, they sometimes do not have company-covered training plans that allow you to update your knowledge.
  • In summary, this model offers less security, while the risk is assumed by the agent and not by the insurance company.