What Are Captive Agents?

What makes a Captive Agent different from an Independent Agent? Are there any classifications in between a Captive Agent and Independent Agent? Are there any advantages or disadvantages to being a Captive Agent?

Captive Agents occur when an agent can only sell insurance from a single carrier. Their ‘captivity’ is contractually bound in order for them to be able to represent that carrier. In exchange for only being able to sell for the one carrier, the carrier will often help pay for some of the operating expenses of the agent and more, such as mentoring the agent, training their new sub-agents, advertisement expenses, creation and implementation of marketing items, signs, and more. The Captive Agent can typically advertise however he or she wants, as long as everything mentions the carrier or has the logo and/or name of the carrier on them.

So a Captive Agent has only one carrier it can sell products from. The next step up from a Captive Agent is a semi-Captive Agent, who is contractually bound to quote every new person/entity with the semi-captive-carrier, but can then seek other markets if necessary. The top tier is the Independent Agent, who can quote anyone they want with any carrier they have.

What are the benefits of being a Captive Agent?

All of the extra perks captive-carriers offer often lures in agents that are just starting out. Starting from scratch is made a lot easier with carrier-provided sales managers/mentors, advertising materials, and other expenses that they’ll pay for. Another benefit of being a Captive Agent is that they only have to know the ‘ins and outs’ of one carrier’s insurance policies.

What are the draw-backs of being a Captive Agent?

Each carrier has specific markets that it targeting with its products, so trying to sell to someone outside of the carrier’s niches is often hard to do. Along with that, having only one company to quote with can create a conflict of interest: if a prospect needs a coverage that the captive-carrier cannot provide, the Captive Agent will either have to tell them to look elsewhere for insurance, or downplay the necessity of that coverage to keep the prospect. This can often sacrifice quality and breadth of the insurance coverage. Furthermore, having only one carrier to sell from simply limits the options they can provide a client.

What about semi-Captive Agents?

Being a semi-Captive Agent is the middle ground between Captive and Independent. Semi-Captives get some of the perks that fully Captive Agents get, but it also creates extra headaches when they try to quote outside of the semi-captive-carrier: if the carrier finds out that the agent didn’t quote with them first, the carrier might sue or drop the agent for a breach of contract. Also, having to quote with the semi-captive-carrier on every piece of business takes up valuable time, especially when the agent know that the semi-captive-carrier won't be competitive.


Colten Zamrzla, CPCU

Colten first started in the insurance industry in 2010. He then pursued a Bachelor's degree in Finance & Insurance from the University of Nebraska at Lincoln. Once graduated, he immediately started studying for the CPCU and achieved it in just shy of a year. He is solely focused on commercial insurance, able to assist all types of businesses and nonprofits in risk management.

Colten has dedication and passion for his clients and the insurance industry as a whole. He dedicates time to furthering his knowledge on all things business and insurance, and he volunteers for the Independent Insurance Agents of Nebraska, a state-based trade association.