DEFINITION of 'Independent Agent'

An insurance agent that sells insurance policies provided by several different insurance companies rather than a single insurance company. An independent agent receives commissions for the policies that he or she sells, and is not considered an employee of a specific insurance company.

BREAKING DOWN 'Independent Agent'

Independent insurance agents, like independent financial advisors, are thought to be able to provide their clients with a wider array of options when it comes to insurance products. They take into account the different coverage needs of the client, and select a policy that provides the necessary coverage at a reasonable price.  

An insurance agent that sells policies offered exclusively by a single insurance company is referred to as a captive agent. While the policies offered by a captive agent may be less expensive than those offered by an independent agent, it will be difficult for the client to know whether he or she is getting the best deal if only one option is made available. Captive agents may show the prices offered by competitors even though they will not be able to offer and sell those policies.

While independent agents can offer their clients with policy options from a variety of different insurers they may not be considered completely objective. Because the insurance companies pay a commission to the insurance agent when he or she sells a new insurance policy, the agent may push clients to select policies that provide the agent with a higher commission rate. 

Because independent agents are not fully supported by a single insurance company, they are often responsible for generating their own business. They may have to produce their own marketing material and manage their own operations, though they do benefit from the general advertising and marketing done by insurance companies. However, if the independent agent does not sell the policies offered by an insurance company that is conducting a large branding advertising campaign the benefit will be limited. 

RELATED TERMS
  1. Direct Writer

    A captive agent that only issues insurance policies from a specific ...
  2. Brokerage General Agent

    An independent firm or contractor working for an insurance company ...
  3. Collection Commission

    The percentage of premiums that an agent is owed for collecting ...
  4. Agent

    Any person who has been legally empowered to act on behalf of ...
  5. Account Current

    A summary of the performance of each individual insurance agent ...
  6. Cover Note

    A temporary document issued by an insurance company that provides ...
Related Articles
  1. Insurance

    Becoming An Insurance Agent

    Few careers match the opportunity for as quick and large a paycheck as does being a life insurance agent.
  2. Financial Advisor

    How to Find the Best Life Insurance Agent

    Choosing a life insurance agent is the first and most important step in obtaining coverage. Buyers should pay attention to five key factors.
  3. Insurance

    8 Qualities That Make A Good Insurance Agent

    Insurance agents must possess each of the following qualities in order to be successful.
  4. Insurance

    What Your Life Insurance Agent Makes – On You

    Being paid by commission gives life insurance agents an incentive to sell bigger policies and specialized financial products. Remember that before you buy.
  5. Insurance

    How Hard Is a Career Selling Life Insurance?

    Learn why selling life insurance is a difficult way to make a living, but also how agents who persevere are rewarded down the road with a strong passive income.
  6. Insurance

    Career Advice: Stockbroker Vs. Insurance Agent

    Compare and contrast careers as a stockbroker and insurance agent. Understand the skills and attributes required for success in each career.
  7. Investing

    What Real Estate Agents Don't Want You To Know

    While they can be instrumental in helping you buy or sell a home, real estate agents may ulterior motives.
  8. Insurance

    Choosing The Best Life Insurance Company For You

    What to consider before you choose the life insurance company that can give you the policy you need now – and meet your needs as your life evolves.
RELATED FAQS
  1. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
Hot Definitions
  1. North American Free Trade Agreement - NAFTA

    A regulation implemented on Jan. 1, 1994, that eventually eliminated tariffs to encourage economic activity between the United ...
  2. Agency Theory

    A supposition that explains the relationship between principals and agents in business. Agency theory is concerned with resolving ...
  3. Treasury Bill - T-Bill

    A short-term debt obligation backed by the U.S. government with a maturity of less than one year. T-bills are sold in denominations ...
  4. Index

    A statistical measure of change in an economy or a securities market. In the case of financial markets, an index is a hypothetical ...
  5. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  6. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
Trading Center