Life insurance is typically sold through agents. There are two types of distribution models: captive and independent agents. There’s no right or wrong approach as both models have advantages and unique challenges. It’s important to understand the two models when deciding the most appropriate fit for you.
What is a captive agent?
A captive agent is an agent that generally represents a single life insurance company. Products and services are limited to the products of the represented carrier. Some examples of life insurance companies with large, captive agent field forces include Northwestern Mutual and New York Life.
Pros of a captive agent
Cons of a captive agent
What is an independent agent?
An independent agent is an agent that represents multiple carriers’ products and services. Access to carriers may be through a direct contract to a company, but it is most commonly achieved through some type of insurance marketing organization (IMO) that pools agent production to meet minimum contract standards, achieve higher commission payouts, or negotiate special support arrangements.
Pros of an independent agent
Cons of an independent agent
How to transition from captive to independent?
The first step is to really analyze if becoming independent is right for you. You’ll have to stomach the loss of renewal commissions and rebuild a book of business. You’ll also want to examine any potential provisions in your contract that might restrict your activities for a period of time. The next step is to vet options for access to the carriers and products you want to represent. There are tons of IMOs and producer groups across the country. Find one that offers you the support and systems you need to be successful. It’s not simply about finding the highest payout. Can you get marketing support? What’s the compliance area like if you offer products through a broker dealer? Do they have advanced sales support? What do they have in place to support underwriting? What carriers/product will you have access to through the IMO?
You’ll likely need to reinvent yourself from a brand perspective: new website, new LLC, new messaging, new offerings. You’ll need to think through how you explain the change to your centers of influence and old client base. Then you and your staff will need to learn the new products, systems, and processes…all while seeking out new client opportunities. What service expectations do you want to set for clients? Will it be a streamlined process that offers a competitive advantage or a labor intensive process that becomes a heavy expense burden?
You need to have a plan and a process to accomplish this. Blindly flailing through each step is not a recipe for success. More thorough due diligence front and development of a plan will go a long ways towards setting you up for success. As the old saying goes, every journey starts with a single step.
Systems will become critical for you. What CRM do you choose? What about integrations with other systems? What email system? Archiving for compliance? File sharing. Security. Phone and video conferencing capabilities are crucial in today’s environment too. Don’t just focus on the front end. You need to think through how you service your clients too.
How Proformex helps independent agents
Proformex is designed with the challenges of independent agents in mind. It makes your life easier, but it also makes it easier for your clients to understand their policies. Some of the benefits of Proformex include:
Your choices matter
Becoming an independent agent can be daunting. However, with the right partner choices, solid systems with an eye on the future, and a sound plan, you can set yourself up for a successful transition that benefits you and your clients.