Who is 'Captive Agent'

A captive agent is an insurance agent who only works for one insurance company. A captive agent is paid by that one company, either with a combination of salary and commissions or with just commissions. He or she may be a full-time employee or an independent contractor. Captive agents have in-depth knowledge of their particular company's insurance products, but cannot help a client who does not need or does not qualify for that company's products. The parent company may push its captive agents to sell certain policies or meet certain sales quotas.

 

BREAKING DOWN 'Captive Agent'

The opposite of a captive agent is an independent agent. An independent agent does not work for any particular insurance company and is often paid by commission only. Independent agents can sell policies from an array of companies. This arrangement can be better for clients because the agent can seek out the best policy for that client's needs. However, an independent agent may not have specialized knowledge about a particular company's products. An independent agent arrangement can be better for agents because it offers a more diversified source of income, but it can also be riskier because the agent may need to provide his or her own startup capital, pay for business expenses and arrange benefits.

Captive agents often excel at providing an exceptional level of service to their clients. This is so because they have the freedom to spend more time on relationship building, fact-finding and customer service – and in an increasingly digitized insurance marketplace, those are the types of things clients increasingly aren't getting.

The main reason an insurance agent would prefer to work as a captive agent is financial. Their company usually provides an office, administrative staff to process paperwork, ongoing training, significant bonus and other motivational programs...not to mention a significant national advertising budget. When consumers respond to advertising, the company directs them to a captive sales agent in their area. Captive agents typically receive extensive lists of prospects from their insurance company. Although some exclusive agents earn a salary, most are independent contractors and earn only a commission based on their sales. Exclusive agents usually earn commissions on their renewals as long as they remain contracted insurance company.

Negatives of Being a Captive Agent

Some carriers still impose quotas for selling products, even if they are subpar when compared to competing products on the market. Some compliance departments will also make the mistake by putting too many restrictions on their captive agents instead of freeing them to sell.

RELATED TERMS
  1. Agent

    An agent is any person who has been legally empowered to act ...
  2. Real Estate Agent

    A real estate agent is a licensed professional who represents ...
  3. Exclusive Listing

    An exclusive listing is an agreement where a real estate agent ...
  4. Account Current

    An account current summarizes the performance of an agent's insurance ...
  5. Agent Bank

    An agent bank is a bank that performs services in some capacity ...
  6. Shareholder Services Agent

    A shareholder services agent is a third party that partners with ...
Related Articles
  1. Investing

    How Real Estate Agent and Broker Fees Work

    Are you buying or selling a home? Here's what you need to know about real estate agent and broker fees.
  2. 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.
  3. Managing Wealth

    Captive Insurance: A Good Wealth Management Tool?

    Captive insurance companies are legitimate tax structures, but pose risks as tax shelters. Still, they can have financial advantages.
  4. 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.
  5. 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.
  6. Investing

    Top 5 Signs Of A Bad Real Estate Agent

    The signs of a bad agent go beyond whether your home sells quickly.
  7. Investing

    Would You Make A Good Real Estate Broker?

    How to tell if you'd be good in this field. It is a common second career for many people, but isn't a good match for everyone.
  8. Investing

    How to Choose the Right Real Estate Broker

    Buying or selling a home can be the major financial transaction of your life. Here's how to choose the right real estate broker or agent.
  9. Investing

    Why You Don't Need A Real Estate Agent

    While there are times when a real estate agent earns the commission, there are other times when you can do it yourself.
RELATED FAQS
  1. How much money do real estate agents make?

    Learn about the salaries of top earners in the real estate industry and how factors, such as location, can raise or lower ... 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. How do real estate agents get listings?

    Learn about how real estate agents get listings in top real estate markets, as well as in smaller areas, through utilizing ... Read Answer >>
  4. Why do real estate agents fail?

    Becoming a successful real estate agent requires a mindset that is built for success and strong, consistent action that buttresses ... Read Answer >>
Trading Center