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. Paying Agent

    A paying agent is an agent who accepts payments from the issuer ...
  3. Shareholder Services Agent

    A shareholder services agent is a third party that partners with ...
  4. Captive Fund

    A captive fund is a private fund that is managed for a select ...
  5. Placement Agent

    A placement agent is an intermediary who raises capital for investment ...
  6. Settlement Agent

    A settlement agent coordinates all paperwork and conditions required ...
Related Articles
  1. 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.
  2. Financial Advisor

    A day in the life of a real estate agent

    There are no set hours and no set days. 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.
  3. 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.
  4. 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.
  5. Insurance

    Becoming a Life Insurance Agent

    Few careers match the opportunity for as quick and large a paycheck as being a life insurance agent, but it takes the right personality.
  6. Investing

    How Do Real Estate Agents Get Paid?

    Most real estate agents are paid a commission based on the sale price of a property and split between the agents and brokers involved.
  7. Investing

    Top 5 Signs Of A Bad Real Estate Agent

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

    Understanding Real Estate Commissions: Who Pays?

    When you set out to buy or sell a house, one factor worth considering is the real estate agent's fees.
  9. Insurance

    Want To Sell Life Insurance? Read This First

    Looking for a career that offers big a financial upside and the lure of self-employment? Life insurance sales could well be for you.
  10. Investing

    How to Choose the Right Real Estate Broker

    Buying or selling a home can be the largest financial transactions of your life. Here's how to choose the right real estate broker or agent.
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. 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 >>
  3. 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 >>
  4. What is the role of agency theory in corporate governance?

    Understand how businesses use agency theory in corporate governance. Learn how moral hazard problems may be addressed using ... Read Answer >>
  5. How are real estate agents, brokers, and realtors different?

    Agents, brokers and realtors are often considered the same. In reality, these real estate positions have different responsibilities ... Read Answer >>
Hot Definitions
  1. Cryptocurrency

    A digital or virtual currency that uses cryptography for security. A cryptocurrency is difficult to counterfeit because of ...
  2. Financial Industry Regulatory Authority - FINRA

    A regulatory body created after the merger of the National Association of Securities Dealers and the New York Stock Exchange's ...
  3. Initial Public Offering - IPO

    The first sale of stock by a private company to the public. IPOs are often issued by companies seeking the capital to expand ...
  4. Cost of Goods Sold - COGS

    Cost of goods sold (COGS) is the direct costs attributable to the production of the goods sold in a company.
  5. Profit and Loss Statement (P&L)

    A financial statement that summarizes the revenues, costs and expenses incurred during a specified period of time, usually ...
  6. Monte Carlo Simulation

    Monte Carlo simulations are used to model the probability of different outcomes in a process that cannot easily be predicted ...
Trading Center