Missouri › What an independent agent is
What an independent insurance agent is
An independent insurance agent can sell policies from many different insurance companies. A captive agent sells insurance for only one company. That's how the National Association of Insurance Commissioners (NAIC), the organization of state insurance regulators, puts it in its consumer guide. Both kinds are paid a commission by the insurance company.
By Tyler Mayberry for Cirlet · Sources checked
Independent agent, captive agent and broker
| Independent agent | Captive (exclusive) agent | Broker | |
|---|---|---|---|
| Represents | One or more insurance companies, as an independent business | One insurance company, or one group of companies under common ownership | The buyer |
| Policies it can offer | From each company that has appointed it | From its one company | Searches the market for the buyer |
| Usually paid by | Commission from the insurance company | Commission or salary from the insurance company | Often a fee from the buyer |
| Who owns the customer relationship | The agent owns the renewal rights to the business it writes | The insurance company | Varies |
Sources: NAIC, How to Choose an Insurance Agent; Robert W. Klein, A Regulator's Introduction to the Insurance Industry (NAIC, 2nd edition, 2005), chapter 3 and glossary.
What "independent" means in practice
- Several companies. An independent agency works with several insurance companies, which it often lists on its website. Each company has to appoint the agency before it can sell that company's policies. The NAIC text says independent agents "generally must be appointed by the insurers they represent."
- The agency owns its book. The NAIC text describes independent agents as owning their "book of business": if the agency stops working with one insurance company, its customers stay with the agency, which can move them to another company it works with.
- Captives work for one company. Captive agents "represent one insurer and do not own the business they generate," and may be employees of the insurer or independent contractors.
- Some companies sell directly. Some insurance companies sell online or by phone without an agent. The NAIC notes that these policies "may be less expensive since the company doesn't have to pay the agent's commission," and that you should check the company is licensed in your state either way.
Licensing in Missouri
Every agent, independent or captive, needs a Missouri license. State law says: "No person shall sell, solicit or negotiate insurance in this state for any class or classes of insurance unless he or she is licensed for that line of authority" (RSMo 375.014). The Missouri Department of Commerce and Insurance keeps the records. To look someone up, see checking an agent's license.
How this directory decides who is independent
We list an agency only if its own website says it is independent, or names two or more insurance companies it works with. We leave out captive agents, franchise networks with a central service office, and national brokers. The details are on the about page.
What this page doesn't tell you
It doesn't say which kind of agent is better for you. The NAIC's guide suggests checking any agent's license, asking what the letters after their name mean, and asking questions until you're satisfied. For questions about insurance in Missouri, the Department of Commerce and Insurance runs an Insurance Consumer Hotline at 800-726-7390.
Questions
What is an independent insurance agent?
An agent who can sell policies from more than one insurance company, as an independent business. Each company the agent works with has to appoint it, and the agent owns the renewal rights to the business it writes.
What is a captive insurance agent?
An agent who sells insurance for only one company, or one group of companies under common ownership. Captive agents may be employees of the insurer or independent contractors, and they don't own the business they write.
Is an insurance broker the same as an independent agent?
Not quite. An agent represents the insurance companies that appoint it. A broker represents the buyer and often charges the buyer a fee. In practice some firms do both, and many call themselves agencies either way.
Do independent agents need a license in Missouri?
Yes. Under RSMo 375.014, anyone who sells, solicits or negotiates insurance in Missouri needs a license for that line of insurance, whether they are independent or captive.