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. Agency Plant

    The amount of presence that an insurance company has in a market.
  2. Captive Agent

    An insurance agent who only works for one insurance company. ...
  3. Direct Writer

    A captive agent that only issues insurance policies from a specific ...
  4. Independent Insurance Agents & ...

    Independent agents who shop around at different insurance companies ...
  5. Brokerage General Agent

    An independent firm or contractor working for an insurance company ...
  6. Unauthorized Insurer

    A company that poses as an authorized provider of a financial ...
Related Articles
  1. Insurance

    How to Become a Life Insurance Agent

    The pros and cons of becoming a life insurance agent, a field that can be hard to crack—but that can pay off big when you do.
  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. Investing

    Do You Need A Real Estate Agent?

    There's no guarantee that realtors will act in your best interest, but it may be worth hiring one anyway.
  4. 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.
  5. 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.
  6. 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.
  7. Financial Advisor

    A Day In The Life Of A Real Estate Agent

    While every day is unique for a real estate agent, there are some activities that may be a typical part of an agent's day.
  8. Investing

    How To Find The Best Real Estate Agent

    Most people don't have the time, expertise or motivation to go it alone and finding a good real estate agent becomes essential to enjoying a smooth real estate transaction.
RELATED FAQS
  1. How can I tell when a real estate agent might be lying to me?

    Find out what real estate agents are likely to lie about, the reasons for the lies and how to protect yourself from unscrupulous ... Read Answer >>
  2. Do real estate agents work on weekends?

    Learn how working weekends and evenings is one way real estate agents increase their chances of making a sale to a potential ... Read Answer >>
  3. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
Hot Definitions
  1. Preferred Stock

    A class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Preferred shares ...
  2. Net Profit Margin

    Net Margin is the ratio of net profits to revenues for a company or business segment - typically expressed as a percentage ...
  3. Gross Margin

    A company's total sales revenue minus its cost of goods sold, divided by the total sales revenue, expressed as a percentage. ...
  4. Current Ratio

    The current ratio is a liquidity ratio measuring a company's ability to pay short-term and long-term obligations, also known ...
  5. SEC Form 13F

    A filing with the Securities and Exchange Commission (SEC), also known as the Information Required of Institutional Investment ...
  6. Quantitative Easing

    An unconventional monetary policy in which a central bank purchases private sector financial assets in order to lower interest ...
Trading Center