Independent Agent (Insurance) - Explained
What is an Independent Agent?
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Table of ContentsIndependent Agent (Insurance) DefinitionA Little More on What is an Independent AgentAdvantages of Independent Agents for ConsumersAcademic Research
Back To: INSURANCE & RISK MANAGEMENT
What is an Independent Agent?
An independent agent is an insurance sales agent that sells several insurance policies belonging to different companies. Rather than become an agent for a single insurance company, an independent agent works for multiple insurance companies and help them market or sell their insurance policies. There are varieties of insurance products or policies that an independent agent sells to individuals, the agent receives a commission for all the insurance policies sold. An independent owes no allegiance to any insurance company because he is not an employee of any of the insurance companies whose policies he sells.
What Does an Independent Agent Do?
An independent insurance agent acts optimally for the benefit of his clients, that his, the interest of the customers come first before the interest of the insurance companies. In order to offer clients the best insurance policies, they have the option of selecting from a wide range of insurance products or policies. An independent agent offers insurance products such as life insurance, health insurance, property insurance, automobile insurance, disability insurance, and other policies to individuals. The policies offered belong to different insurance companies and have different prices from which clients can select from. Generally, independent agents own their business and are not controlled by a particular insurance company. A captive agent is different from an independent agent, this insurance agent works for a single insurance company and can thereby lure clients into purchasing insurance policies that belong to the company they work for. Despite that independent agents sell insurance policies of many companies, the options they offer to clients are not totally without biases. Given that independent agents receive commission s from the insurance companies, there is a tendency that they act in favor on an insurance company that pays the highest commission. This means they offer their policies to clients first and try to convince them even before showing them other options.
Advantages of Independent Agents for Consumers
It is important to know that independent agents try to generate business for themselves, they own their business and act in the best interest of their clients. On of the major benefits of independent agents is that they offer several products with different quotes that clients can select from. Independent agents also provide advisory services to clients seeking to purchase insurance policies. They are experts and help clients choose the best policies that suit their insurance needs. As an individual that seeks to purchase an insurance policy, shopping with independent agents is the best because they offer more benefits than captive agents.
- What is insurance?
- Captive Agent
- Independent Agent
- Captive Insurance Company
- Combined Ratio
- Claims Adjuster
- Capital at Risk
- Assigned Risk
- Incurred But Not Reported
- Qualified Actuary
- Cession (Re-Insurance)
- Burning Cost Ratio
- What is an insurance contract?
- Accidental Means
- Anti-stacking Provisions
- What is an insurable interest?
- What are the common categorizations of insurance?