Is It Better to Work with an Independent Broker or a Captive Agent?
Independent brokers provide insurance solutions with a variety of insurance carriers, but captive agents generally only offer life insurance solutions with one carrier.
At first glance, it may seem obvious that independent brokers provide clients with a better value, but the following takes a closer look at the pros and cons of working with an independent broker or captive agent.
Independent Broker Pros:
1. Independent brokers are free to work with any carrier.
2. An independent broker should be able to find insurance at the lowest price.
3. Independent brokers offer a wider product portfolio.
Independent Broker Cons:
1. Many independent brokers, although able to work with multiple carriers, only work with two or three.
2. Due to a large product offering, many independent brokers may not fully understand all the products they sell.
3. Many independent brokers have limited back office support.
Captive Agent Pros:
1. Since captive agents generally only offer coverage from a single carrier, they are more likely to have a better understanding of the products they are selling.
2. In most instances, captive agents have very good back office support.
3. Captive agents may have a stronger relationship with underwriters, especially those who have been working with the same company for a number of years.
4. in some instances, captive agents may offer a loss leader type policy from their carriers, which an independent broker would not have access to.
Captive Agents Cons:
1. The insured may pay a higher premium due to a limited or uncompetitively priced product portfolio.
2. A captive agent may be pressured by company quotas.
3. Captive agents may not be able to offer the appropriate insurance need for the consumer. For example, certain insurers don't offer 20 year term policies or disability insurance type policies, among their captive brokers, so those agents may not able to properly address the client’s insurance needs.
According to LIMRA the Canadian industry supports an average of 15,000 captive agents per year with a turnover rate of 16% an an average retention rate of 25% over four years. Meanwhile, The Financial Advisors Association of Canada supports over 10,000 members as the largest Financial Professional Association.
Life Insurance Rates
Now, it's your turn to weigh-in: Who do you prefer to buy from, independent brokers or captive agents? Leave your comments below!