Captive vs. Independent Agents

Katie Wilmoth | July 23, 2015

Which Route Should I Go?

If you’ve recently looked into opening your own insurance agency, and you aren’t sure whether you should go the captive or independent route, look no further.

There are positives and negatives to both models of insurance businesses, but it really comes down to individual needs and wants. What are you looking to get out of the business? How experienced are you?

How Do Captive Insurance Agents Work?


Owning and operating a “captive” insurance agency means working for one company. You will only have to learn one company’s products, policies, and guidelines. There’s usually ample training, assistance setting up your agency, and you won’t have to worry about doing any of your own advertising and marketing because you’ll have the added benefit of a nationally recognized brand. You will also likely have a more reliable form of compensation such as a salary and benefits, plus sales bonuses depending on how well you do.


You will only have one product to sell to your customers. Even if they are not the best priced or most suitable product, they are the company you represent, therefore the product you must convince your customer to go with. So if your parent company stops selling a certain line of insurance, you won’t be able to sell it either. You may also be obligated to push certain products you feel your client doesn’t need or want. Your main priority, as a captive agent, will be to build business for your parent company, and you will likely not have the freedom to perpetuate your agency to whomever you wish when you’re ready to retire.

What's it like as an Independent Agent?


Your main priority for your independent agency will be to build your own book of business and do the right thing for your customers. You can make your own hours, your own rules, and market your agency how and when you want. You’ll be able to specialize in any, and as many lines of business as you want. Best of all, you will be able to provide competitive quotes for your clients by shopping a multitude of different insurance carriers products! This means if you can’t find a suitable product with one carrier, you’re free to search out another carrier with a more suitable product line for your clients’ needs.


As an independent agent, you will be a small business owner and entrepreneur. This could be viewed on a positive OR negative depending on the person. You will need capital to start the business. You won’t have a steady income as you begin your agency and start your book of business from scratch, because you’ll earn money solely based on commission. The money you do earn will have to be wisely put back into the agency in order to grow for the first couple of years. You may also have trouble obtaining contracts, or “appointments,” with reliable and reputable insurance carriers in the beginning – a Managing Agent Group or “MGA” (a company that helps you get carrier appointments) can help you with this part of the process.

Katie Wilmoth