What is an Independent Insurance Agent? (And the 7 Best Reasons to Hire One)
You could say insurance runs in my blood! You see, my father and my grandfather were both independent insurance agents. I have had several great uncles who were independent agents, and now both of my brothers work with me as insurance agents at Baily Insurance Agency providing insurance for clients all over Pennsylvania, Ohio, and West Virginia.
One of the things I love most about our agency is that it is an independent insurance agency.
But why does it even matter that our agents are independent insurance agents? How does that set us apart from other agencies? How does being independent benefit our clients?
In this article, I want to highlight three topics:
- What sets independent insurance agents apart
- Why you can have confidence in your independent agent
- How it benefits you to work with an independent agent
So, what is an independent insurance agent?
Well, in simple terms, an independent insurance agent represents customers to multiple insurance companies. Unlike a captive agent, who is only allowed to sell products from a single insurance company, independent agents contract with many different insurance companies to give their customers multiple product options as well as multiple policy quotes.
Your independent agent is your legal representative to the insurance company.
After being licensed by your state, independent insurance agents have the responsibility to be your advocate. They are required to put your interests ahead of themselves and the insurance companies they work with. Even though your agent is paid by the insurance company, essentially, they work for you!
Why You Can Have Confidence In Your Agent
Every state has regulations that require a person to be licensed in order to sell insurance. Because insurance is such a complicated and ever-changing field, states require education that will help agents to have a good base knowledge of insurance. Once licensed, agents must continue their insurance training to maintain their license. These regulations protect the customer.
The process of becoming an agent is rigorous. It is the job of the insurance agent to make sure you have excellent coverage, and the licensing process is the first step agents take to become prepared.
So what is required of prospective agents?
Pennsylvania requires prospective agents to take a pre-licensing test before they can even study to become an insurance agent. The results of this pre-licensing test will determine if one can take a pre-licensing course.
The pre-licensing course gives an overview of the insurance marketplace and applicable laws. The state government approves and administers this program. Before taking the test, prospective agents are required to take a minimum of 24 hours of approved pre-licensing coursework. At least three of those hours must be coursework on ethics.
2. Insurance Producer Exam
After the coursework is completed, the government administers a proof of completion. At that point, you are eligible to study for and eventually take the Insurance Producer exam. This exam tests a prospective agent on their general insurance knowledge as well as their knowledge of state and federal regulations.
The prospective agent will also complete coursework to prepare for the producer exam. This exam will vary depending on the line of insurance the prospective agent wants to sell (i.e. life, health, commercial, home & auto, etc.). To pass the test, you must score 70% or better on the exam. Only when the prospective agent passes the exam, can they apply to be licensed.
While the newly licensed agent is allowed to begin selling insurance, their expertise is very limited. They will most likely need a more experienced agent to help them during the early part of their insurance career.
3. Continuing Education
To protect consumers, Pennsylvania requires that every licensed insurance agent continue to take classes.
These classes include webinars, in-person classes, and online classes and ensure that agents are keeping current with insurance industry standards. If you do not complete 24 hours of continuing education every two years, your license will be terminated.
4. Appointment with Insurance Company
Insurance companies appoint agents to write business on their behalf. To become appointed with an insurance company, an agent fills out an application for appointment and then interviews with the insurance company. If the insurance company is confident the agent can effectively, competently, and honestly represent them they are appointed.
An independent insurance agent is able to apply for appointment with multiple companies. This allows the agent access to a variety of insurance products from multiple agencies. It really gives the independent insurance agent a lot of options.
Some agents choose to work for insurance companies that only permit them to be appointed with that company. An example of this would be State Farm. If an agent is appointed with State Farm, they are only permitted to sell State Farm products and can not apply for appointment with other companies. This limits the agent’s selection of products.
With multiple companies to work with, a good independent insurance agent fills the vital role of advocate to help you negotiate the best possible terms and pricing of your insurance policies. They also help navigate other issues that may arise with an insurance company (e.g. claims, billing disputes, etc.).
5. Insurance Agent Designations
When you see the letters M.D. after a name, you know the person with those extra letters has expertise in the area of medicine. If you see Esq., you know that the person has expertise in law. Insurance agents also can continue their education and attain expertise in the insurance marketplace.
To become an expert, insurance agents can take masters level insurance courses and earn a designation expressing the area in which they have expertise. They may become a workers’ compensation specialist, a certified insurance counselor, a management liability insurance specialist, etc.
When you see letters like CIC, CRM, or CISR following an insurance agent’s name, you can be sure that they have dedicated themselves to becoming an expert in their field.
When looking for a commercial insurance agent, knowing that your agent has taken the time and has the additional knowledge they need to be an expert in their field is essential. Commercial insurance is very complicated and your business is very valuable, so knowing your agent is an expert can give you added peace of mind.
What are the benefits of working with an independent insurance agent?
Working with an independent insurance agent has many benefits for the customer. An independent agent has a lot of resources at their disposal and they work for their customer!
Consider these seven reasons why working with an independent agent is a benefit to you.
1. Independent insurance agents have access to multiple insurance companies and resources.
This is one of the greatest advantages of working with an independent agent. Independent agents don’t just work with one insurance company, but rather can help inquire about rates and products from any insurance company they are appointed to write business with.
How does this benefit you?
This allows you to shop for your insurance in one place and have multiple options made available to you. Rather than going to a bunch of agencies that will likely rush through the application process to try and get your business first, it is usually in your best interest to find an independent agent that can effectively represent you. They already have multiple insurance companies to work with and find the best rates. Let your independent insurance agent do the work on your behalf.
2. Independent agents can give you unbiased advice.
Because independent agents work with multiple companies, they can look objectively at your policy options and help you make an informed decision without ulterior motives. Remember that independent agents are required by law to put the customer’s interests first.
So when your car insurance rates have a significant increase, and you need to find options to lower your costs, your independent agent will have multiple insurance companies to work to get you a more reasonable quote. Or if your commercial insurance policy needs to add new coverages, your independent insurance agent will have in-depth knowledge of which companies offer exactly what you need.
Your needs are their priority. Not the insurance company.
Also, because independent agencies are appointed by multiple insurance companies, they are not required to only sell one company’s product. They can give you feedback about the various products available to them as well as the various insurance companies they write business with.
This is different from working with a captive agent. A captive agent only works for one insurance company. An example of a captive agent would be someone who works for State Farm, Erie Insurance (often in PA), or Allstate. Generally, captive agents are only able to sell products from one insurance company. Working with a captive agent limits your options in terms of both pricing and products. With a captive agent, they will only be able to sell you what the insurance company they work for offers.
3. Independent agents focus on developing relationships with their customers.
A good independent agent walks with their customers throughout their life changes. They are there when their customers move from one home to another, when their children begin to drive, and when their business takes on a new venture.
Because your independent insurance agent has so many companies they work with, they are able to help you move seamlessly when you need to switch providers in the midst of life’s changes and challenges.
Your agent is also present during some of the hardest times of their customers’ lives – when they have an accident or tragedy or when they suffer the loss of a loved one. In difficult times like these, it is a comfort to work with someone with whom you already have an established relationship.
4. Even if you need to switch insurance companies, an independent agent can still represent you.
There are times when it is in your best interest to switch insurance companies. Maybe the company you have been with has had a significant rate increase. Maybe the company has higher rates when you add a teen driver. Maybe your company changes the products they offer to your particular line of business. Whatever the reason may be, there are times when you may want or need to move your insurance to another company.
An independent agent will be able to work with you in all of these instances to help you move your policy to another company. They can help you find another company with better rates or a more complete product for your particular insurance needs.
Even though you are switching insurance companies, your agent will still be available to help you with your insurance needs and provide continuity throughout the process. If you are working with a captive agent when you terminate the relationship with your insurance company you also terminate your relationship with your agent.
5. Independent agents give you person-to-person assistance.
So many times today when you need help with a service, you have to call a number and wade through a series of automated recordings before you ever reach a human to help. Sometimes you never even reach a person who can help me solve my issue.
With an independent agent, you can reach out to someone who can assist you. They can help you with billing issues or with filing claims. Unlike some online insurance providers, because independent agencies are locally owned, you also have the option of stopping in their office to do your business face-to-face.
6. Independent agents are a one-stop-shop.
Most independent insurance agents and agencies offer all lines of insurance – homeowners, auto, life, health, business, workers’ compensation, etc. When you meet with an independent agent, they can assist you with all of your insurance needs and make sure that all the various products work together. They are not limited to one product or one company.
In addition to this, independent agents often help their clients by placing multiple policies with the same company. Sometimes companies offer discounts for bundling multiple insurance policies together. Your agent will know where to place your policies to give you the best products at the best prices.
7. Your independent agent is also your local agent.
Independent agents live and work in the community they serve. They understand your community and are often invested in the community where you live.
They also have the advantage of understanding local issues that may affect your coverage like flood zones or which areas are more prone to sewer back up.
Wondering how to find the best independent insurance agent?
Finding a great independent insurance agent to assist you in your insurance buying process is invaluable! Your agent will help you protect the most important things in your life – your family, your home, your business! An independent insurance agent will be able to help you find the best options and the best prices.
Founded in 1880, Baily Insurance has a long legacy as an independent insurance agency in Southwestern PA. Our agency has been helping clients with their home, auto, life, and business insurance for 140 years.
To learn more about what you should be looking for in your commercial insurance agent, read 4 Keys to Finding the Best Commercial Insurance Agent. This guide will give you a better understanding of the high expectations you should look for your commercial insurance agent.