Insurance Agent Odessa, TXYou may have wondered about the phrase Independent Insurance Agent. What exactly does that mean? And why should I use them? In this week’s blog we will try to clarify that for you.

Insurance agents who work for one company are referred to as ‘captive agents. They will only sell insurance policies from one insurance company. The only way you can buy insurance policies from those companies are through their exclusive agents.

Independent agents, on the other hand, can sell insurance products from a variety of insurance companies.

There are pros and cons to both. For captive agents, knowing the ins and outs of a certain company’s policies has an advantage. Ideally, they know their company’s policies thoroughly. Independent agents however, are able to shop around, negotiate and get you the best price on comparable policies from a number of different insurance companies.

Independent insurance agencies are licensed through 99.5 percent of all insurance companies. An MGA (managing general agent) is used for hard to place commercial risks. Unlike traditional agents, an MGA is vested with underwriting authority from an insurer. Many independent agents are not big enough to get direct contracts with insurance companies, so they broker through an MGA.

Agents working as brokers operate on a lower commission rate because the MGA keeps part of the commission and charges a monthly fee to write policies through them. Brokers have no binding authority through the policies they write through an MGA and are required to tell the insured they are not the “agent of record’.

Working with an independent insurance agent serves you in many ways. They not only find you competitive pricing, they make sure you’re fully and correctly covered. Working with you face-to-face, an independent agent is more like your personal adviser, taking the time to listen to you and understand your individual needs.

Independent agents are often your neighbors who share an interest in the community and the challenges of living in the area. An independent insurance agent also offers the convenience of one-stop shopping by providing you with auto, home, renter, business coverage and whatever specialty insurance you may need along the way.