Transitioning from a Captive Agent to an Independent Insurance Agent


What Is a Captive Insurance Agent?

A captive agent works for an individual insurance carrier and is paid with commissions or a combination of commissions and salary. The agent may be a full-time employee or an independent contractor. Captive agents have in-depth knowledge of their particular company’s insurance products, but can’t help a client who doesn’t need or qualify for that company’s products.

The parent company may require agents to sell certain policies or meet certain sales quotas. Many captive agencies also dictate which website vendors and agency management systems agents can use. Some insurance companies may also apply restrictions that prevent agents from making the most relevant recommendations to clients. 

What Is an Independent Insurance Agent?

An insurance agent who doesn’t work for a specific insurance carrier is known as an independent insurance agent. These agents typically work on a commission-only basis. Independent agents can sell policies from many carriers, which allows the agent to find the best insurance products that meet their client’s needs and that give them the most competitive commissions.

When asked about the advantages of going independent, Agency Revolution Founder Michael Jans noted that, “As an independent insurance agent, you can represent more carriers to your customers and marketplace, and you have much more freedom as a true entrepreneur.”

Independent agents also have the benefit of being able to select their own systems — including choosing the website and marketing vendors that provide them the best insurance marketing solutions. 

With the right resources and knowledge, an independent agent has access to a more diversified source of income and more opportunities for greater earnings. Although independent insurance agents work solely on commission, their commission percentage can be as much as 50% higher than captive agents.

The Future of Captive Insurance Agents

According to Matt Masiello, CEO of the Strategic Insurance Agency Alliance, captive carriers are reducing their captive agent pool and are opening their doors to independent agents. (Check out Matt’s podcast about the evolution of independent agents on our Connected Insurance Podcast.)

The captive vs. independent insurance agent debate will ultimately be decided by online consumers as brick-and-mortar agencies become less relevant. Captive agents rarely have a local brand or a unique digital presence, which puts them at a disadvantage for providing the personalized service that consumers demand. Independent agents can freely tap into their targeted markets by building a unique brand, offering more solutions, and personalizing the client/agent relationship. As Masiello puts it, “Consumers are looking for choice” — and independent agents can offer more of them.

How to Become an Independent Insurance Agent

When you transition from being a captive agent to an independent insurance agent, you must learn how to handle all the tasks your parent company managed for you. You’ll need to do the following to get started:

So, what should you do first to make the transition? Jans provided a few important steps: “Before you transition, read the contract with your captive carrier carefully to avoid non-compete violations. You need to secure existing relationships to create a smooth transition for you and your clients. Be transparent about what’s happening and why it’s good for the customers: more coverage options, filling coverage gaps, etc.” 

He goes on to state, “Your goal is to deliver value by setting up critical automated campaigns to boost retention and referral programs to grow your business. You must also focus on cross-selling existing accounts and building a strong presence for your business online.” This includes making sure that your Google Business listing is up to date, you have positive customer reviews, your website is optimized for search engines, and that you use paid advertising to drive traffic and generate new leads. 

Learning how to become an independent insurance agent is much like learning any other business: You must figure out where you can access resources. From underwriters and carrier marketing representatives to trade groups and industry-specific marketing firms, there’s plenty of help to make your transition a smooth one. But be prepared to juggle multiple responsibilities and expect an imbalance in your organization.

“Your time will be out of balance for the foreseeable future,” said Jans. “You’re an independent agent creating a startup, so you will encounter many of the challenges (and rewards) of entrepreneurs in other industries.” 

Independent Agent’s Must-Have Marketing Tools

Taking your career from captive to independent is a big step. If you’re considering making this move, you’re probably wondering what marketing tools you need to be successful as an independent agent. When we asked Jans, he responded, “Customized insurance marketing tools and marketing automation with Agency Revolution!”

At Agency Revolution, our focus is on helping independent insurance agents build their brand, grow their business, and retain their customers. Here’s how we do it:

  • Agency management system integration

Our platform seamlessly integrates with your management system to help you engage with clients, streamline your workflow, and manage your books. We help you build a firm foundation for your operations so you can focus on building relationships.

  • Associations and networks

We partner with a range of associations and networks and we encourage independent insurance agents to join so they can benefit from a pool of resources. We partner with Iroquois Group, Keystone Group, Combined Agents of America (CAA), First Choice Agents Alliance (FCAA), Latin American Association of Insurance Agencies (LAAIA), Pacific Interstate Insurance Brokers (PIIB), Valley Insurance Agency Alliance (VIAA), and other associations, through which you’ll find carriers that offer your clients the best policies and you the best commission structure.

  • Brand building

Establishing your brand identity starts with a professionally designed logo that gets noticed. We offer logo design services where we work with you to create a new logo or update your existing logo.

  • Independent agent website design

You need a modern, responsive website optimized for SEO that communicates your value. We help you create a website with built-in marketing tools that generate leads and provide value for your clients. When you’re ready to make your move toward being independent, your website will already be set up as a solid foundation for all your marketing efforts. 

We understand the challenges you face as you transition to being an independent insurance agent because we helped insurance agents from State Farm, Nationwide, Farmers, American Family, and others become independent agents for decades. 

Contact Agency Revolution today. We’re proud to offer you a vast array of resources to help you navigate the unique needs of independent insurance agents.

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