Should I Stay or Should I Go? The Captive Insurance Agents Decision to Go Independent

For many captive insurance agents, the idea of going independent is both exciting and daunting. The insurance industry is vast and complex, with various types of insurance agencies operating within the broader insurance world. Understanding where your insurance agency fits in this landscape is crucial for making informed career decisions. 

Typically, it comes down to one key question: Could I do more for my clients — and for myself — if I went independent?

The difference between captive and independent agents is central to this decision, as it affects your access to products, companies, and the way you serve your clients. Here’s a look at the benefits and trade-offs you’ll need to consider.

For agents, the key question often revolves around the choice between captive and independent paths, each offering distinct advantages and challenges.

The Captive Advantage: What It Means to Work for Captive Insurance Companies  

There are many benefits to being a captive agent. Captive agents work as a full time employee for a single insurance company, often referred to as the parent company. This exclusive relationship means you represent only one insurance company and focus on their specific offerings. With select products to manage, you can develop a deep understanding of your company’s offerings and focus on providing exceptional customer service to your clients. You also get built-in support from the brand, including help setting up your office, operating systems and administrative processes.

“The typical captive agency, when they start … they get a lot of support from the mothership,” says Mike Miller, State Director at Smart Choice, a leading insurance network. “They get information on lists and leads, but they have fewer products to offer (than a typical independent agent). The other thing captive agencies enjoy is national advertising. And if you have the right district manager, you get some ongoing training and some good motivational support.”

Captive insurance agents rely on their parent company's resources, such as marketing materials and training, to build their business. They are also bound by contractual agreements to sell only their company's products, meaning they specialize in one company's products and develop deep expertise in those offerings.

There’s a structure in place to help you succeed, but it also comes with limitations.

The benefit of this structure is that you gain in-depth knowledge of your company's policies and company's products, which enables you to provide expert advice and specialized products and services to your clients. However, you’re often subject to sales quotas and must meet sales targets, with your income and bonuses frequently tied to the number of policies sold and the strength of your client base. When your one carrier doesn’t have a product to fit a client’s needs, your hands may be tied.

Captive insurance companies play a significant role in supporting their agents, providing resources, training, and operational guidance to help them succeed within the company’s framework.

As a captive insurance agent, your responsibilities include not only client consultation and policy placement, but also ongoing lead generation to grow your client base and handling policy renewals to ensure continued service and satisfaction.

Customer service is a key part of the captive insurance agent’s role, as you are responsible for selling products and delivering your company’s products and services to clients, ensuring their needs are met within the scope of your insurance company’s offerings.

If you’re looking for more ownership over your book of business or craving the autonomy that comes with running your own agency, it may be worth considering a move to independence — but understand there are always trade-offs.

Captive and Independent Agents: Weighing the Benefits of Independent Opportunities

The independent channel opens a whole new world of opportunity. As an independent insurance agent or insurance broker, you can represent multiple insurance companies and multiple insurance carriers, offering clients a broader range of products and coverage options than captive agents. This allows you to build a broader book of business with more diverse income sources.

The independent insurance agency model also brings significant benefits, such as competitive pricing, tailored solutions, and the ability to meet each client's unique needs more effectively.

Independence is attractive from a financial standpoint as well, as Miller explains: “The independent world pays great commissions. As a captive agent you’re going to share a split of those commissions with (State Farm, Allstate, GEICO or Farmers etc.), and then you’re going to pull back about 4-5% in commission. But in the independent world, you would get the full 12% commission, which makes it a little bit more exciting.” In addition, an independent insurance agent works as an independent contractor or may even own their own business, providing even more autonomy and control over their career.

That commission income alone is a compelling reason for many captive agents to consider the switch. Plus, as an independent, you also have access to contingency bonuses, profit-sharing, and other incentive programs that captive agents sometimes miss out on. Independent agents can represent multiple companies and many insurance companies, giving them access to a wide product range, including business insurance and health insurance.

Independent agents enjoy greater flexibility and freedom when it comes to problem-solving — an area where captive agents often face limitations, especially in hard market conditions. This flexibility is supported by the independent channel’s broad adoption of digital tools like comparative raters, commercial quoting platforms, and embedded AI. Independent insurance agents and brokers use their in-depth knowledge to compare insurance products and represent multiple insurance carriers. When challenges arise, independents can access additional underwriting sources, helping improve client satisfaction, retention, and referrals.

Independent insurance agents and brokers provide tailored solutions and a broader range of products to meet diverse client needs, ensuring clients receive the best possible service and coverage.

Should I Stay or Should I Go? 

The transition from captive to independent does come with some challenges. Financial readiness is a big factor. There are start-up costs to consider, such as E&O insurance, licensing, agency management software, branding, and more. At a captive agency, much of this is handled for you so you can focus on selling insurance and providing exceptional customer service. During the transition, providing clients with ongoing support and ensuring their insurance needs are met is essential for maintaining trust and satisfaction.

There’s also the potential for a short-term income dip while you build your book and navigate any client retention risks or non-compete agreements. For some, the uncertainty around marketing, client communication, or securing carrier appointments can be intimidating. Additionally, agents must be prepared to guide clients through the claims process, ensuring prompt handling and dedicated assistance to maintain high levels of customer satisfaction.

There are real pros and cons on both sides.

Leaving a legacy brand like State Farm or Allstate can feel like walking away from a family. But independence doesn’t necessarily mean going it alone. Joining an agency network can give you the same kind of support you enjoyed in the captive world, with the added benefits of autonomy and ownership of your business. Being part of an agency network also helps agents make informed decisions about carrier selection, product offerings, and business growth strategies.

At Smart Choice, for example, agent members gain:

• Access to over 100 carriers and 300 products
• Mentorship and support from territory managers
• Agent-friendly contracts
• 100% commission
• Modern technology solutions
• Easy access to commercial lines and the E&S market
• Peer networking opportunities

In some unique situations, if your captive carrier is open to it, you may also be able to launch an independent business alongside your captive agency. This can help you serve clients with risks that fall outside your captive carrier’s appetite.

For Miller, the bottom line of this “hard decision” comes down to: “What’s best for the agencies and what’s best for the clients?”

Going independent isn’t for everyone.

But if you’re hitting walls with underwriting, feeling capped on income, or simply wanting to offer more — it might be time to explore the next chapter.