Independent Insurance Agent
Encyclopedia
Independent insurance agents, also known as insurance sales agents or "producers", typically sell a variety of insurance
and financial products, including property insurance
and casualty insurance
, life insurance
, health insurance
, disability insurance
, and long-term care insurance.
Property and casualty insurance agents sell insurance policies that protect individuals and businesses from financial loss resulting from automobile accidents, fire, theft, storms, and other events that can damage property. For businesses, property and casualty insurance
can also cover injured Workers Compensation Insurance, product liability claims, or medical malpractice
claims.
Independent insurance agents typically represent a number of insurance companies, or "carriers", and sell the products that most appropriately meet the needs of their clients. Independent agents typically are very well trained and knowledgeable of the complexities of the insurance market and insurance law
. Their expertise allows them to advise their clients about appropriate amounts of insurance
and insurance coverages for their particular needs. For their efforts, independent agents are paid a commission (remuneration)
for their efforts.
In addition to insurance policies, agents often sell mutual funds, annuities
, and products that address wealth management, retirement
and estate planning
. Independent agents must be licensed by the states in which they sell insurance and financial products.
There are a number of major trade organizations that support the interests and needs of the independent insurance agent, including Agents For Change
, the Independent Insurance Agents & Brokers of America ("The Big I")., and the National Association of Professional Insurance Agents ("PIA").
Independent agents are independent contractors for the insurance companies they represent. Several companies may authorize the agent to sell for them, but the agent remains an independent businessperson. While the agent collects commission
s, they do not collect a salary from the companies they represent. On average, independent agents work with thirteen property and casualty and six life and health insurance companies on a regular basis.
Independent agents own and control their accounts, policy records, and renewals. If an independent agent’s contract with a particular insurance company terminates, the agent retains the rights to active accounts and may place them with another insurer.
Competition exists between exclusive agents and independent agents. Exclusive agents, who are salaried employees of the insurance company, write a majority of the personal lines business. However, because of the complexities involved in commercial risks, independent agents capture approximately 80 percent of the commercial lines market. It is having access to multiple markets that gives independent agents a competitive advantage in commercial lines.
To add to an independent agent’s competition pool, many insurance companies are direct competitors to the agents they appoint. For example, Progressive Insurance spends nearly $300 million a year in advertising directly to the public. Yet, Progressive is the country’s largest writer of private passenger auto insurance through the independent agent distribution channel. Some examples of independent insurance agencies are Reliable Insurance and R&R Insurance Services
.
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
and financial products, including property insurance
Property insurance
Property insurance provides protection against most risks to property, such as fire, theft and some weather damage. This includes specialized forms of insurance such as fire insurance, flood insurance, earthquake insurance, home insurance or boiler insurance. Property is insured in two main...
and casualty insurance
Casualty insurance
Casualty insurance, often equated to liability insurance, is used to describe an area of insurance not directly concerned with life insurance, health insurance, or property insurance. It is mainly used to describe the liability coverage of an individual or organization's for negligent acts or...
, life insurance
Life insurance
Life insurance is a contract between an insurance policy holder and an insurer, where the insurer promises to pay a designated beneficiary a sum of money upon the death of the insured person. Depending on the contract, other events such as terminal illness or critical illness may also trigger...
, health insurance
Health insurance
Health insurance is insurance against the risk of incurring medical expenses among individuals. By estimating the overall risk of health care expenses among a targeted group, an insurer can develop a routine finance structure, such as a monthly premium or payroll tax, to ensure that money is...
, disability insurance
Disability insurance
Disability Insurance, often called DI or disability income insurance, is a form of insurance that insures the beneficiary's earned income against the risk that a disability will make working uncomfortable , painful , or impossible...
, and long-term care insurance.
Property and casualty insurance agents sell insurance policies that protect individuals and businesses from financial loss resulting from automobile accidents, fire, theft, storms, and other events that can damage property. For businesses, property and casualty insurance
Casualty insurance
Casualty insurance, often equated to liability insurance, is used to describe an area of insurance not directly concerned with life insurance, health insurance, or property insurance. It is mainly used to describe the liability coverage of an individual or organization's for negligent acts or...
can also cover injured Workers Compensation Insurance, product liability claims, or medical malpractice
Medical malpractice
Medical malpractice is professional negligence by act or omission by a health care provider in which the treatment provided falls below the accepted standard of practice in the medical community and causes injury or death to the patient, with most cases involving medical error. Standards and...
claims.
Independent insurance agents typically represent a number of insurance companies, or "carriers", and sell the products that most appropriately meet the needs of their clients. Independent agents typically are very well trained and knowledgeable of the complexities of the insurance market and insurance law
Insurance law
Insurance law is the name given to practices of law surrounding insurance, including insurance policies and claims. It can be broadly broken into three categories - regulation of the business of insurance; regulation of the content of insurance policies, especially with regard to consumer...
. Their expertise allows them to advise their clients about appropriate amounts of insurance
Insurance
In law and economics, insurance is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment. An insurer is a company selling the...
and insurance coverages for their particular needs. For their efforts, independent agents are paid a commission (remuneration)
Commission (remuneration)
The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold...
for their efforts.
In addition to insurance policies, agents often sell mutual funds, annuities
Annuity (US financial products)
In the United States an annuity contract is created when an insured party, usually an individual, pays a life insurance company a single premium that will later be distributed back to the insured party over time...
, and products that address wealth management, retirement
Retirement
Retirement is the point where a person stops employment completely. A person may also semi-retire by reducing work hours.Many people choose to retire when they are eligible for private or public pension benefits, although some are forced to retire when physical conditions don't allow the person to...
and estate planning
Estate planning
Estate planning is the process of anticipating and arranging for the disposal of an estate. Estate planning typically attempts to eliminate uncertainties over the administration of a probate and maximize the value of the estate by reducing taxes and other expenses...
. Independent agents must be licensed by the states in which they sell insurance and financial products.
There are a number of major trade organizations that support the interests and needs of the independent insurance agent, including Agents For Change
Agents For Change
Founded in 2005, Agents For Change is a grassroots trade association of over 8,500 insurance agents and brokers from across all lines of insurance working together to enact an optional federal charter to allow producers the option of being regulated at either the federal or state level...
, the Independent Insurance Agents & Brokers of America ("The Big I")., and the National Association of Professional Insurance Agents ("PIA").
Independent agents are independent contractors for the insurance companies they represent. Several companies may authorize the agent to sell for them, but the agent remains an independent businessperson. While the agent collects commission
Commission (remuneration)
The payment of commission as remuneration for services rendered or products sold is a common way to reward sales people. Payments often will be calculated on the basis of a percentage of the goods sold...
s, they do not collect a salary from the companies they represent. On average, independent agents work with thirteen property and casualty and six life and health insurance companies on a regular basis.
Independent agents own and control their accounts, policy records, and renewals. If an independent agent’s contract with a particular insurance company terminates, the agent retains the rights to active accounts and may place them with another insurer.
Competition exists between exclusive agents and independent agents. Exclusive agents, who are salaried employees of the insurance company, write a majority of the personal lines business. However, because of the complexities involved in commercial risks, independent agents capture approximately 80 percent of the commercial lines market. It is having access to multiple markets that gives independent agents a competitive advantage in commercial lines.
To add to an independent agent’s competition pool, many insurance companies are direct competitors to the agents they appoint. For example, Progressive Insurance spends nearly $300 million a year in advertising directly to the public. Yet, Progressive is the country’s largest writer of private passenger auto insurance through the independent agent distribution channel. Some examples of independent insurance agencies are Reliable Insurance and R&R Insurance Services
R&R Insurance Services
R&R Insurance Services is one of the largest independently owned insurance agencies in the Midwest and represent national and regional insurance carriers....
.