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What Is the Difference between Captive and Independent Insurance Agents?


Most people differentiate insurance agents by the kind of insurance they specialize in – health insurance agent, auto insurance agent, life insurance agent, and so on. In the insurance industry, however, there is another important way that insurance agents can be classified: captive insurance agents vs. independent insurance agents. Whether you are a captive insurance agent or an independent insurance agent can have a profound effect on your daily routine, the kind of insurance you sell, and your income potential within the industry.

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What Is a Captive Insurance Agent?

Captive insurance agents, otherwise known as exclusive insurance agents, are contracted to work for a single insurance company and sell only that insurance company’s policies. In return for captive agents agreeing to sell only their policies, insurance companies generally provide their exclusive agents with a fair amount of support, which can include setting them up with an office or other workspace, and giving them access to an administrative staff to process paperwork. When consumers contact an insurance company about purchasing a policy, they will generally refer them to a captive agent that works in their area.

What Is an Independent Insurance Agent?

Unlike captive insurance agents, independent insurance agents are not contracted to work with one single company, and they can sell policies from multiple insurance companies. Instead, independent insurance agents contract with multiple insurance companies, selling specific lines of insurance coverage from those companies on a non-exclusive basis.

While independent agents do not have access to the support and referrals that insurance companies provide to their exclusive agents, independent insurance agents have the benefit of being able to offer their clients policies from multiple insurance providers, giving them the ability to offer a wider selection of coverage options. On the downside, independent insurance agents are generally not allowed to sell policies offered by the companies which rely on captive agents, which often sell their policies through their own agents exclusively.

Independent vs. Captive

The biggest difference between captive and independent insurance agents is in compensation. Typically, independent insurance agents take home a higher percentage of the sales they make, sometimes earning commissions as much as 50% higher than their exclusive agent counterparts. That said, independent insurance agents are also responsible for paying for all their own overhead, meaning that much of their earnings is spent maintaining their independent business operation.

For captive insurance agents, lower commission rates are a tradeoff made in return for the insurance companies they are contracted with paying a significant portion of their overhead, as well as often paying them a salary in addition to commissions earned from sales. While independent insurance agents have a theoretically higher earnings ceiling than captive agents, the stability provided by working directly for an insurance company means that a captive insurance agent’s income is likely to be more stable and consistent. To offset the costs of operating independently, many independent agents partner with other agents to form agencies, with each member agent contributing to the cost of operations.

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Frederick Bradley
Frederick Bradley
5 years ago

I would truly would like to obtain my property and casualty license and this seems to be to be a great program.

Ashley Johnson
1 year ago

I liked that you said that one thing to consider when you are need of new insurance is to get in contact with a professional independent insurance agent since they can offer you options of insurance from several different insurance companies. I have been thinking about getting new insurance but I have been worried that I won’t find a policy that will meet my needs. I will be sure to use the help of an independent insurance agent so that I can achieve several different options from different companies that would benefit me.

Debi Poe
Debi Poe
1 year ago

If I take a course for Life Insurance for Iowa will I learn and be able to sell Annuities as well? I would also like to be an independent agent. Will the course also assist me on how to be independent and how to obtain a working relationship with multiple insurance companies?

bob vance
bob vance
1 year ago
Reply to  Debi Poe

AN independent insurance agent is a great way to go. I would suggest getting your feet wet at an established agency first Good Luck
BOB at Vance refrigeration

Alicia Byrne
8 months ago

Thank you for pointing out the difference between an independent agent and captive insurance agents. My thoughts would be that as long as the insurance policy is good for you and the insurance agent works well with you then it is enough. My daughter is going to buy insurance for her car and I would imagine her needing the help of an insurance agent soon.

T. Jones
T. Jones
6 months ago

I currently work for a brokerage company and I contract through several life insurance companies. However, I find that a large number of my clients are looking for auto insurance as well. Can I sign up for another brokerage company that partner with auto insurance companies while staying with my current brokerage company?

Andrew Greeley
Andrew Greeley
4 months ago

A brokerage posted a job listing looking for insurance agents in a independent brokerage; they don’t pay for any of the course unlike some captive brokerages do. The employer said captive brokerages are worse because they own your license, so if you ever leave, you don’t get to keep your insurance license.

Is this true?

Xavian J Tate
Xavian J Tate
2 days ago

If someone gets their insurance license through a specific insurance agency during an internship can they still use the license elsewhere since it was an internship?

Xavian J Tate
Xavian J Tate
1 day ago


We make every effort to ensure that the content on our site is accurate but it’s always recommended to you contact your state’s Insurance Licensing Department or Test Provider for information. Thank you. – The AP Team