Captive vs Independent (P&C)

[MikeyR]

Today I had a meeting with our district manager (Farmers) and he gave me the whole retail agent or protege pitch and I am just not really sold. Now don't get me wrong when I first started with Farmers I was really against the idea against of captive and I am slowly seeing the appeal to being a captive.



Now of course he asked me what I thought, because I made it clear when I first got hired that I planned on being here for 3ish years before I go independent.

I pushed back at him with
- Competing against yourself if your captive direct markets (He pointed out this could still happen to your clients as independent)

- Higher compensation ( We are paid 10% renewals my understanding is independent can get 13%)

- Not all my eggs are in on basket if Farmers decide to change directions I can rewrite my book elsewhere which I think is one of the biggest factors is more stability in my opinion.

- No corporate to dictate what you can and cant do, or how you do it


Now I think you are truly are missing out on two big things which is
the branding & the support system/infrastructure
I would argue the branding can sometimes even swing against you but the ability to have someone to call whether it be a tech question, underwriting question, or even business questions is pretty darn handy. For example today we visited the DM's office and he went over someone of our commercial policies before we proposed them to the clients.

I guess what I am asking is, is the grass truly greener on the other side?

 

[Markthebroker]

I'll just nutshell this to keep it simple. I'm sure lots of other people will chime in with additional information, but you will get a consensus generally agreeing with these two statements with lots of angles, individual points, math, Etc.

Your best bet is to start out captive, stay there for a little while, then go indi.

Many people have gone from captive to indy, and not the other way around, and there's good reason for this.

 

[BADTROUT]

Today I had a meeting with our district manager (Farmers) and he gave me the whole retail agent or protege pitch and I am just not really sold. Now don't get me wrong when I first started with Farmers I was really against the idea against of captive and I am slowly seeing the appeal to being a captive.



Now of course he asked me what I thought, because I made it clear when I first got hired that I planned on being here for 3ish years before I go independent.

I pushed back at him with
- Competing against yourself if your captive direct markets (He pointed out this could still happen to your clients as independent)

- Higher compensation ( We are paid 10% renewals my understanding is independent can get 13%)

- Not all my eggs are in on basket if Farmers decide to change directions I can rewrite my book elsewhere which I think is one of the biggest factors is more stability in my opinion.

- No corporate to dictate what you can and cant do, or how you do it


Now I think you are truly are missing out on two big things which is
the branding & the support system/infrastructure
I would argue the branding can sometimes even swing against you but the ability to have someone to call whether it be a tech question, underwriting question, or even business questions is pretty darn handy. For example today we visited the DM's office and he went over someone of our commercial policies before we proposed them to the clients.

I guess what I am asking is, is the grass truly greener on the other side?

In short... yes... thats why you see it as a one way street as @Markthebroker said. There are marketing advantages to the captive side, but i can personally introduce you to many Farmers agents who have made the move and they could give you all the pluses and minuses.

You mentioned 10 vs 13 but I can also tell you 15 to 18 is on the table often... and typically if you are writing mainstreet CL or packaged home and auto 15% is a good budgeting percentage.

Understanding the captive side will help you appreciate independence, but either way its hard work. When in doubt choose independence. Hit me up if you have any other questions. Happy to help, and good luck!

 

[marindependent]

A lot of great advice on here already.

• I agree with BadT that the comp can be higher, technically it can lower too, but in general its higher
• You will be able to write way more risks as a true independent
• I agree with Markthe... start out captive and move indy
• Captive sort of has the marketing advantage when you start off
• But... when the referrals start rolling in, you won't have to say - Oh we can't write rolled flat roofing because... you will have more market access
• Many captive agent insurers put you in a pickle with the contract - Produce or Get Kicked out. Well the pickle you put yourself in when you go truly independent is to purely make it work financially.
• Setting up an Independent Shop might be a LOT more Entrepreneurial.. Setting up a Captive shop is more Franchiseish. [That being said there are Independent Options that are essentially franchises.]

I truly believe that the grass is indeed greener - but its not premade sod, its grass that starts from seeds and takes a TON of water and just because you do all the right things there is no guarantee that it will grow weed free.

Best of Luck.

 

[MikeyR]

I agree with everything, they say why go independent life will be so much more difficult and that at farmers we have our own brokerage (Kraft Lake) why bother going anywhere else.

my issue is all my eggs are in one basket if farmers to decide to shake my basket up I am left with cracked eggs. I would like the ability to know that if something went wrong with a primary carrier I can simply rewrite with a different carrier.


Plus I am than truly my own business, if I want to cut a deal with a financial advisor or outside life insurance agent. Scaling and expanding I feel is much more doable as independent, again obviously I lack the “support” of a big mothership.


What I really enjoy rn is the ability to sit down with my DM and leverage his experience to double check my quotes & proposals.

 

[marindependent]

What I really enjoy rn is the ability to sit down with my DM and leverage his experience to double check my quotes & proposals.

Yep that is The Master / Apprentice relationship for certain.

 

[VMC Group]

100% Independent!
Not only for the compensation but unrestricted marketing opportunities, no need for corporate approval. Also if you are independent some of the carriers will co-op on the marketing and provide you with some marketing budget if you drive business to them and you co-brand your marketing materials. On another side, you can work with so many carriers and offer a more versatile range of insurance products/programs.

 

[MikeyR]

100% Independent!
Not only for the compensation but unrestricted marketing opportunities, no need for corporate approval. Also if you are independent some of the carriers will co-op on the marketing and provide you with some marketing budget if you drive business to them and you co-brand your marketing materials. On another side, you can work with so many carriers and offer a more versatile range of insurance products/programs.

I talked a broker near me bc I had some questions about independent and he said the same thing. That relationships with the carrier reps can pay because when the marketing money comes around you will be at the top of the list.


It just feels that independent is much more business rather than franchise.

 

[Markthebroker]

I talked a broker near me bc I had some questions about independent and he said the same thing. That relationships with the carrier reps can pay because when the marketing money comes around you will be at the top of the list.


It just feels that independent is much more business rather than franchise.

Right, but you can test the waters - start by working as an independent agent for a brokerage house. For me, that's the best of both worlds.

Still, yes, on the indi side there is more freedom. More freedom to make good decisions, and bad ones. Do good marketing, and bad. More freedom to succeed, and to fail.