When it comes to entering the insurance world, people have two options: Become a captive agent or an independent insurance agent. Secure Agent Leads gets this question all the time: Should I be a captive agent or go out on my own as an independent agent? This is a question only you can answer for yourself.
Firstly, each option comes with positives and negatives. While independent insurance agents do tend to make more money, they also take on some additional risk. In contrast, captive agents have more stability and support. The downside of being a captive agent is you also have to follow rules set by your contracting agency.
In case you need some helping picking which business model better fits you, here are some pros and cons of both options:
Captive Agent
A captive insurance agent is contracted to work exclusively with one insurance carrier. Examples would be working for State Farm, Allstate, Farmers and etc. With this in mind, here are the pros and cons of being a captive agent:
Pros:
- Provided with financial support to get their business off the ground
- Resources and guidance including client and insurance lead referrals, product training, marketing and advertising tools
- Better route for learning insurance products by specific carrier
- More reliable and stable source of income paid through the parent company directly
Cons:
- Main goal is to build business for the parent company, limiting your agency’s resale value and target audience
- Limited by the products their parent company offers
- Parent company pushes certain policies
Independent Agent
Generally speaking, independent insurance agents have contracts with multiple insurance companies. As a result, these agents are able to sell a more diverse line of products with fewer restrictions. In general, here are the pros and cons of being an independent insurance agent:
Pros:
- Main goal is to grow your agency
- Usually higher commission rate compared to captive agents
- Don’t have to follow strict rules from parent company
- Ability to cross-sell other insurance products
Cons:
- Pay your own expenses from staffing, insurance leads, marketing and etc.
- No support, guidance, or resources from a parent company or fellow agents
- Profits have to be put back into the business to offset startup costs and lead generation
- Obtaining contracts with desirable carriers can sometimes be difficult
- Income is not guaranteed
With this in mind, you need to have a steady stream of insurance leads. If you need to supplement your pipeline, Secure Agent Leads has the industry’s best customer service and provides leads in real-time specific to your demographic needs.
