Title : How an Independent Insurance Agency Works
link : How an Independent Insurance Agency Works
How an Independent Insurance Agency Works
Hey this is Jeremy from Shine Insurance.
Our video today is all about What is an Independent Insurance Agent. I get
this question all the time because at Shine Insurance we are independent
insurance agents. "What does that mean?" And all these questions always come up so i
thought i'd just resolve that in a quick video right here. The best
way to describe what an independent insurance agent is is to talk about the
three ways to get home auto or business insurance and therefore
show you what's available and what the different options are.
So the
first one is to sign up online or call an 800 number by simply going to your
online spaces and getting insurance on your own. The second is what's called captive
agents and i'll describe that in a second. The third is an independent
agent. So let's start at the very beginning.
You can definitely go online
or call an 800 number and get insurance all by yourself. It's very easy, it's very quick, and you are
on your own in doing so. More and more people are doing that. More and more
commercials are being shown for those kinds of companies so that certainly is
one way to go about getting your insurance.
Some examples of those are
companies like Liberty Mutual Insurance or Safe Auto, Basially a lot of the ones you see in
commercials are available online or through an 800
number. The second is through what's called
captive insurance agents. These are folks that usually have a local branch
of a large insurance company. The term captive refers to the fact that those
folks work for one specific company.
They work for the company, therefore they are
captive to that company. They can't go out and look at other companies, other
options. If you're calling them for insurance they're going to show you what
is available with their insurance company. Some common examples of those are State Farm, Allstate, or Farmers.
Generally, those folks have local spaces
you can go to if you want to walk in the door of their agency, shake hanks
with an actual human, you can do that. As far as how they're paid (because I get
that question a lot, "how are different folks paid for the work they do") agents of a captive agency are generally
paid a salary. They work for the company, they're paid a salary. They generally get performance bonuses associated with how
many folks they bring in the door as well.
So that brings us to independent agents.
An independent agency is an agency that provides access to multiple insurance
companies and advises about which one is best for you. So independent agencies
make relationships with multiple companies. They go out to those companies and say "hey you're a great company we would love to work with you. Would you
like to work with us?" They do that with multiple different companies.
It could be two companies, it could be five, it could even be 10 or 20.
Different
agencies work with different amounts of companies but all independent agencies
work with multiple companies. The companies have to know going in
that if they're working with independent agents there's going to be competition
in that agency. In a captive agency there's no competition. The people work
for the company, there's no other companies there.
In an independent agency
there is competition amongst companies inside that agency. Because the agency
has multiple companies that they're working with, the companyies independent
agents work with are different than the captive companies. I get the question all
the time "Can you offer me State Farm or Allstate or
Farmers?" The answer is "No". I don't work with those companies because
they've made a choice.
They have chosen to have their own agents in towns around
the country instead of working with independent agencies. So companies have
to make a decision: Do they want to work with independent agents knowing
that there will be competition in the agency or do they want to have their own
captive agents in town and just have no competition in the agency? As far as how
independent agents are paid, its different as well. Generally speaking
independent agents are paid a percentage of your insurance premium. So if you
decide to work with them and you pay, let's say, $1000 for your insurance
policy, the insurance agency is going to get some cut of that premium.
So in
essence and an independent insurance agent is free to you. The number that is
sent to you as the quote, that's how much your auto, home, or business insurance is going to
cost. That is the
bottom line number you'll be paying. But a little bit of that money comes back to
the agency and that's how they make their money.
To set up a
graphic, let's break down four different parts. Obviously there's
lots of different things to think about when you're thinking about which
insurance company to work with but here are four examples of the difference
between these three options. Let's start with speed. You want to get a quote, you
need it right now, you need it quick.
Well the best option
here's probably online or 800 number. The reason is it's very automated.
You're going to go online. You're going to plug some information and they're
gonna pop a number out and if you like it, you're just gonna go for it.
So speed generally speaking is going to be better
if you work with online or 800 numbers. As far as local, captive
agents and independent agents are generally there locally.
So there's an
office you can walk into, shake hands with your agent, sit down and talk about
your policies if that's what you want to do. Ao as far as local goes, captive and
independent are your best options. You're certainly not going to have that
option if you're working with an online or 800 number company. They're simply not
local and you know that going in.
As far as quality and when I'm talking about
quality what I'm trying to say is the quality of your insurance policy. That
it's been put together properly. That it's going to have coverage for you when
those bad things happen. Who's going to provide you with the best
quality policies and the best quality companies.
Well, in general, the the access
point that has the most options is going to give you the best quality because
those independent agents have multiple companies they can look at. One of
the things independent agents are constantly looking at is the
quality of the policy that the companies are providing. If the company
doesn't have a good quality policy i can move on to another company. I don't have
to stick with that particular company and so I'm more likely as an independent
agent to provide you with quality coverage in a quality company.
Alright the last one. Well let me just
back up and say the one that's going to have the least amount of
potential quality is going online or to 800 numbers. With a captive or an independent
you have people who are looking at your policies and making decisions about what
to offer you. You're much more likely to see quality
from an independent agent and even a captive agent then you are from online or an 800 number where they're really
not paying any attention to what you're purchasing.
You're making all those
decisions on your own without really any advice and so the chances of the quality
being low are very high. That's one of the problems with going online or to
an 800 number. OK, finally price. Now I'm going to come to a conclusion here in
just a second but I should preface it by saying no one can say they have
the best price.
Price depends on so many different things at so many different
moments in time. When you decide to look for insurance, that is a single moment in
time. Any company may have the best price at that moment, it doesn't mean that
price is going to stay the same. Companies prices fluctuate year after
year.
Sometimes going up sometimes (not as often as we'd like it to)
going down. In general though, an independent agent is going to know the
ebbs and flows of price in the marketplace and be able to offer you a
company that is the strongest combination of price and quality at that
given moment. More importantly, as time passes, if that company's price gets worse or goes
up, an independent agent is going to be able to say, "you know what.
You're with this company. They've taken great care of you.
But their price is not as good as some
other companies right now. Here's another one I can offer. You've got a choice. Do you want to
stick with that company that you trust and you know or do you want to switch
over to this other company and work with them because their prices better?" The
great thing is even if you do change, you get to stay with the independent agent.
You don't lose your
local personal relationship when you change from one company to another. As a result, what I see when I'm up against independent agents, when i'm
looking at someone's policy that they already have and they're thinking about
coming and working with Shine is that if I'm up against an independent agent i
have a harder time showing a much better price then if i'm up against captive
agents. This is because they're simply not offering you any other options but the
single option they have. So they're not going to tell you necessarily if their
price is worse than everyone else.
I mean if they've got the worst price in town
that's still the only company that they have to work with. So in general for
those reasons independent agents tend to to have better price. OK, so "What is an
Independent Insurance Agency. That's the reason you started watching this video, right? It's
access to multiple, often exclusive, insurance companies inside of one agency.
The agency works for you not the company.
So the agent is not working for any company, the
agent is choosing which companies to work with. Obviously they have a
relationship with those companies but they don't work for the company and that
works to your advantage if there's any issues along the way. Your agent is motivated by quality and good advice. There's a reason you go to an
independent agent and it's to have an advisor You want access to great
companies? Sure.
You want access to good policies? Absolutely. But you also want
access to good advice and in general you're going to get that in an
independent agency in a way that you may not be able to get in a captive
agency. You're certainly not going to get if you go online or go to an 800
number. You can usually find the best price and coverage for reasons i already
described.
Finally, insependent agents help during claims. Most captive agents and certainly
the 800 numbers are not going to be an advocate for you during
claims. In fact, most captivates don't even get
involved in the claims process. So if you have a local agent who helped you to
put the policy in place and then you have a claim you're really going to be
working directly with the company.
That agent is not going to be able to
help you out. With independent agents, that's different. You'll still be working
with the company during a claim because the company's ultimately
who is paying out the money but if you need your local agent to help
you, if there's something going on in that claim that doesn't seem quite right,
your local independent agent should be able to help you out as a
mediator as a person that comes between your perspective and the insurance
company's perspective. It's one of my favorite things personally to do.
To
really pull those two things together and take a potentially bad situation potentially and help my clients understand exactly what's going on. I I tell my
them all the time that I don't always have the information you want to hear but I
have the information that will help you understand why things are the way they are. In claim
situations that's so important to just be able to understand. So often
claims are confusing and an independent agent can help you
make sense of it.
Alright, that was "What is an independent
insurance agent". I hope that you understand things a little bit better.
So what about other Shine videos? We've got a New Home Buyers Guide out there. If you
haven't gone to our channel and checked that out. If you're in the market for a
house, the first place you should go is this video and our new home buyers
guide that you can download underneath the video to help you walk from
beginning to end through the process of buying a new house.
Auto Insurance Explained - if you ever
just want to understand the details of your auto insurance policy whether
you're in an at-fault state or a no fault state, Check out our two videos
on auto insurance. Finally if you just want funny, we've got a video called How Not to
Light a Bonfire. Don't think I need to go too much deeper into that. Well go ahead
and check that out and see someone behaving incredibly poorly and maybe
laugh a little bit.
Finally, two
last things we need you to do. As always the last step in the video is to
subscribe to our YouTube channel. If you like the information you learned in this
video, we've got multiple videos that do exactly what i did here: just as quickly
and simply as possible explain some part of the insurance world. And please go
ahead and share this video with other folks in your social media world.
I always
say "good information is only great when it's shared with others." If you learned
something here, if you feel like you know independent agents better than you did
before, go ahead and pop that out in your social
media world and let other people experience it as well. Okay well that's the end of this video.
Hope you enjoyed it, Until the next time, have a wonderful day! Go to www.Shineinsurance.Com for more.
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