The definition of an independent insurance agent

You and various insurance companies are connected through an independent insurance agent. You and various insurance companies are connected through an independent insurance agent. Since the early to mid-1800s, independent agents have existed; as a result, the Independent Insurance Agents & Brokers of America, Inc. trade association was established in 1896. Approximately 36,000 independent insurance companies operate in the United States today. Before you begin working with an independent insurance agent, educate yourself on who they are, how they can assist you, and how they stack up against other types of agents.

An independent insurance agent is what?

An independent insurance agent works on behalf of various insurance companies and typically gives customers a selection of insurers, policies, and prices. Independent insurance agents typically market and sell:

Homeowners' insurance (such as homeowners, renters, and auto insurance)
coverage for both life and health
Plans for employee benefits and small business insurance
pension products
auto insurance that isn't typical, like non-owner policies

How Does a Freelance Insurance Agent Operate?

Selling goods from various insurance companies, independent agents sometimes work for themselves. Typically, the agent must demonstrate that they are a good fit for sales and have a promising customer pipeline. To sell an organization's insurance, they might need to apply and be accepted, or they might need to complete company-specific training. Other independent agents work with wholesalers or insurance membership networks, giving them access to carriers and administrative help. When you ask for a quote, independent agent shops around for you among different insurance providers to help you weigh the benefits and drawbacks of different coverage options and insurers, a good agent will present them side by side. Independent agents might additionally have access to carriers that the typical consumer cannot access online. For instance, the typical person can't get a quote for Chubb insurance online; they must speak with an agent. The insurance company pays the independent insurance agent a commission after you purchase your policy. No matter which insurance company you choose, agent commissions are typically comparable.

What distinguishes independent, captive, and direct sales insurance agents?

You can purchase insurance from an independent insurance agent, a captive agent, or a direct sales agent at the insurance provider. Direct and captive agents are only permitted to sell policies from one insurer, whereas independent insurance agents are permitted to sell policies from multiple carriers. Everybody gets commissions, but direct salespeople probably get a base pay or wage.

Independent Insurance Agent Advantages and Disadvantages

Pros

Additional options for convenient shopping Local expertise and backing Personalized service Suitable for complex insurance requirements

Cons

Not every insurer is offered. Might not be able to offer immediate protection

Pros Explanation

More options for easy shopping: Independent insurance agents may offer a variety of coverages (health, auto, RV, and commercial) from numerous insurers, which can simplify your shopping process by eliminating the need to obtain multiple quotes via websites or phone representatives.
Local expertise and support: An independent agent is frequently a resident and a local business in your community, so they are familiar with the surroundings and potential dangers. An independent agent might be a good option if you want to help a neighborhood business. Typically, you can remain with your agent forever.
Service tailored to you: An independent agent will anticipate speaking with you about your requirements and living circumstances. They might be better equipped to locate discounts or better coverage that more closely matches your needs.
Suitable for complicated insurance requirements: If you have a DUI on your record, multiple residences in various states, a small business, or high net worth assets, an independent agent might be able to find you coverage more quickly than you could by yourself.

Cons Described

Some insurers are not available: Only firms for which they have been permitted to act as agents can be represented by independent agents. Additionally, an independent agent cannot provide options from all insurers because some insurance companies only sell their products through employees or captive agents. For instance, a non-affiliated agent might not be permitted to sell you insurance from companies like State Farm, USAA, Amica, or online insurance companies like Lemonade.
May not be able to provide immediate coverage: An independent agent may not be a good fit if you require coverage right away—say, within the next 10 minutes—and don't have time to speak with them about their services, figure out what kind of coverage you require, or wait for them to look into their options.

Relevant Lessons

Independent insurance brokers can make the purchasing process more accessible by offering various coverage options from numerous carriers.
Independent agents might not represent every insurance carrier you wanted to research because they can only sell policies for the insurers they represent.
If you require specialized insurance, an independent insurance agent might be able to locate the ideal policy for you.

Frequently Asked Questions (FAQs)

How do I turn into a self-employed insurance agent?

Depending on the insurance you want to sell, you may need to study, complete course requirements (set by the state), and pass one or more exams before becoming an independent agent. You can sell various insurance products or policies in various states if you have a license. Many recently licensed agents gain experience working for an established agency before opening their own. As your career progresses, you will need more education.

How is a self-employed insurance agent paid?

Like other agents, an independent agent is paid on commission.

How do I determine whether an agent is independent?

There are a few ways to learn:

Inquire directly with the insurance agent: "Do you collaborate with various insurance providers or just [company X]? What number of carriers do you work with?"
Look for language on their website or advertising designating them as an "independent agent."
Check their history with the licensing body in your state to see how many insurance companies they represent.