Independent insurance agent

Last updated

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. [1] Their expertise allows them to advise their clients about appropriate amounts of insurance and insurance coverages for their particular needs. Often, independent insurance agents will work with insurance intermediaries, who obtain quotes from multiple insurance providers and pass them off to the independent agent. Working with an insurance intermediary service allows the independent agent to review many quotes and offer their clients the best policy options available. For their efforts, independent agents are paid a commission (remuneration). [2]

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. [2]

There are a number of major trade organizations that support the interests and needs of the independent insurance agent, including Agents For Change, [3] The National Organization of Life and Health Agents (NOLHA), [4] the Independent Insurance Agents & Brokers of America (The Big "I"), [5] and the National Association of Professional Insurance Agents (PIA). [6]

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 commissions, 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. [7]

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. [8] However, because of the complexities involved in commercial risks, independent agents capture approximately 80 percent of the commercial lines market. [9] 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. [10]

Related Research Articles

<span class="mw-page-title-main">Insurance</span> Equitable transfer of the risk of a loss, from one entity to another in exchange for payment

Insurance is a means of protection from financial loss in which, in exchange for a fee, a party agrees to compensate another party in the event of a certain loss, damage, or injury. It is a form of risk management, primarily used to hedge against the risk of a contingent or uncertain loss.

<span class="mw-page-title-main">Distribution (marketing)</span> Making products available to customers

Distribution is the process of making a product or service available for the consumer or business user who needs it, and a distributor is a business involved in the distribution stage of the value chain. Distribution can be done directly by the producer or service provider, or using indirect channels with distributors or intermediaries. Distribution is one of the four elements of the marketing mix: the other three elements being product, pricing, and promotion.

<span class="mw-page-title-main">Financial services</span> Economic service provided by the finance industry

Financial services are economic services provided by the finance industry, which together encompass a broad range of service sector firms that provide financial management, including credit unions, banks, credit-card companies, insurance companies, accountancy companies, consumer-finance companies, stock brokerages, investment funds, individual asset managers, and some government-sponsored enterprises.

Underwriting (UW) services are provided by some large financial institutions, such as banks, insurance companies and investment houses, whereby they guarantee payment in case of damage or financial loss and accept the financial risk for liability arising from such guarantee. An underwriting arrangement may be created in a number of situations including insurance, issues of security in a public offering, and bank lending, among others. The person or institution that agrees to sell a minimum number of securities of the company for commission is called the underwriter.

Chubb Limited is an American company incorporated in Zürich, Switzerland. It is the parent company of Chubb, a global provider of insurance products covering property and casualty, accident and health, reinsurance, and life insurance and the largest publicly traded property and casualty company in the world. Chubb operates in 55 countries and territories and in the Lloyd's insurance market in London. Clients of Chubb consist of multinational corporations and local businesses, individuals, and insurers seeking reinsurance coverage. Chubb provides commercial and personal property and casualty insurance, personal accident and supplemental health insurance, reinsurance and life insurance.

<span class="mw-page-title-main">General insurance</span> Non-life insurance policies

General insurance or non-life insurance policy, including automobile and homeowners policies, provide payments depending on the loss from a particular financial event. General insurance is typically defined as any insurance that is not determined to be life insurance. It is called property and casualty insurance in the United States and Canada and non-life insurance in Continental Europe.

<span class="mw-page-title-main">The Travelers Companies</span> American insurance company

The Travelers Companies, Inc., commonly known as Travelers, is an American insurance company. It is the second-largest writer of U.S. commercial property casualty insurance, and the sixth-largest writer of U.S. personal insurance through independent agents. Travelers is incorporated in Minnesota, with headquarters in New York City, and its largest office in Hartford, Connecticut. It has been a component of the Dow Jones Industrial Average since June 8, 2009.

Bankers Life is the primary subsidiary of CNO Financial Group, Inc.. The company was established in 1879 in Chicago, Illinois. CNO is a Fortune 1000 company whose subsidiaries provide insurance products and services to customers in the United States. The core retail market served by Bankers Life is the pre-retirement and retirement aged individual and their families whose annual household income is between $25,000 and $75,000.

Bancassurance is a relationship between a bank and an insurance company that is aimed at offering insurance products or insurance benefits to the bank's customers. In this partnership, bank staff and tellers become the point of sale and point of contact for the customer. Bank staff are advised and supported by the insurance company through wholesale product information, marketing campaigns and sales training. The bank and the insurance company share the commission. Insurance policies are processed and administered by the insurance company.

An insurance broker is an intermediary who sells, solicits, or negotiates insurance on behalf of a client for compensation. An insurance broker is distinct from an insurance agent in that a broker typically acts on behalf of a client by negotiating with multiple insurers, while an agent represents one or more specific insurers under a contract.

<span class="mw-page-title-main">Financial adviser</span> Professional who renders financial services to clients

A financial adviser or financial advisor is a professional who provides financial services to clients based on their financial situation. In many countries, financial advisors must complete specific training and be registered with a regulatory body in order to provide advice.

<span class="mw-page-title-main">Fireman's Fund Insurance Company</span> Defunct insurance company based in Novato, California, United States

Fireman's Fund Insurance Company is a former insurance company based in Petaluma, California which provided personal, commercial property and casualty insurance products in the United States. The company was a principal U.S. subsidiary of Allianz, a global financial services company.

A risk management information system (RMIS) is an information system that assists in consolidating property values, claims, policy, and exposure information and providing the tracking and management reporting capabilities to enable the user to monitor and control the overall cost of risk management.

<span class="mw-page-title-main">Tokio Marine HCC</span> International specialty insurance group

Tokio Marine HCC is an international specialty insurance group with offices across the United States, the United Kingdom, Spain, and Ireland. The company is based in Houston, Texas, U.S.A. but has major offices in Atlanta, Barcelona, Boston, Chicago, Dallas, Detroit, Farmington (CT), Frederick (MD), Ireland, Leicester (UK), London, Los Angeles, Madrid, Mount Kisco (NY), and New York City.

Tata AIG General Insurance Company Limited is an Indian general insurance company and a joint venture between the Tata Group and American International Group (AIG). Tata Group holds a 74 percent stake in the insurance venture with AIG holding the balance of 26 percent.

W. Brown & Associates (WBAIS) is an independently owned Wholesale Insurance Broker and Managing General Agent (MGA), headquartered in Irvine California. Founded by a group led by William Brown in 1987, the company's initial market was Aviation insurance, however over time W. Brown & Associates expanded into the adjacent Property and Casualty insurance market in addition to its aviation insurance products.

FBD Holdings plc is an Irish insurance company. Its primary listing is on the Euronext Dublin. It is one of Ireland’s largest property and casualty insurers looking after the insurance needs of farmers, private individuals and business owners through its principal subsidiary, FBD Insurance plc. The Group also has financial services operations including a successful life and pensions intermediary. The Company is a holding company incorporated in Ireland. The company is headquartered in Bluebell in Dublin, and it has 34 branch offices throughout the Republic of Ireland.

<span class="mw-page-title-main">Financial Services and Markets Authority (Belgium)</span>

The Financial Services and Markets Authority (FSMA) is the financial regulatory agency in Belgium.

<span class="mw-page-title-main">Sukoon Insurance</span> UAE insurance company

Sukoon Insurance previously known as Oman Insurance Company is a composite insurance company headquartered in Dubai, UAE that sells insurance for individuals and businesses in UAE and Oman. Established in 1975 with majority ownership by Mashreq Bank, Sukoon is one of the largest publicly listed insurers in the country. Abdul Aziz Abdullah Al Ghurair is the chairman and Jean-Louis Laurent Josi is the CEO of Sukoon.

Health Insurance Innovations (HII) is a product agnostic insurance technology platform. The firm has headquarters in Tampa, Florida and is listed on NASDAQ. The company uses a cloud-based platform for licensed independent agents to enroll customers in products provided by insurance companies which provide the actual coverage. The firm also provides billing and information services for both the clients and the agents.

References

  1. ↑ Princeton Review, "Insurance Agent/Broker" <http://www.princetonreview.com/Careers.aspx?cid=81>
  2. 1 2 U.S. Department of Labor, Bureau of Labor Statistics, Occupational Outlook Handbook, 2008-09 Edition <http://www.bls.gov/oco/ocos118.htm>
  3. ↑ "Home". agents4change.net.
  4. ↑ National Organization of Life and Health Agents (NOLHA) <http://nolha.org/>
  5. ↑ Independent Insurance Agents & Brokers of America <http://www.iiaba.net/na/default?ContentPreference=NA&ActiveTab=NA&ActiveState=0#SlideFrame_2>
  6. ↑ Professional Insurance Agents <http://www.pianet.com/>
  7. ↑ National Alliance Research Academy, <http://www2.scic.com/ Archived 2010-11-11 at the Wayback Machine >
  8. ↑ Cummins, J. David (1977). "Economies of Scale in Independent Insurance Agencies". The Journal of Risk and Insurance. 44 (4): 539–553. doi:10.2307/251718. JSTOR   251718.
  9. ↑ American Agent & Broker <http://www.agentandbroker.com/Exclusives/2010/2/Pages/LGA-plans-to-increase-personal-lines-growth-for-independent-agents.aspx>
  10. ↑ "Recent News Releases & Coverage | Progressive Newsroom".
This page is based on this Wikipedia article
Text is available under the CC BY-SA 4.0 license; additional terms may apply.
Images, videos and audio are available under their respective licenses.