The Captive Insurance Agent vs the Independent Insurance Broker - Blog

By Staebler Insurance On Dec 29, 2015

You can purchase your policy directly from the insurance company using the phone or online, or you can buy though an insurance broker. With more ways to purchase insurance than ever before the question facing the consumer is:
"Should I go through a captive insurance agent or an independent broker?”

Which is better?

Captive insurance agents, such as The Co-Operators or State Farm, have contracts with their one insurance company and only sell their products.
An Independent insurance broker is not exclusive to a single insurance company.   They shop the market and get products that line-up with your coverage and price needs.  They work for you: the insurance buyer, and place your insurance with the insurance company that offers the best value.
Do you prefer to have just one option or a selection?

What are the benefits of a Captive Agent?

While the independent insurance broker has the comparative advantage of offering the consumer real choice, the captive insurance agent has the advantage of having greater depth of knowledge in the products of the one insurance company they represent.
Captive insurance agents also benefit from the advertising that the insurance company will do on their behalf.

Which insurance companies offer better value?

The auto premiums that insurers charge are regulated by the Provincial Government.  Each insurance company has to apply for any rate changes and present their results to justify the pricing they are requesting.  All insurance companies participate in this process whether represented by captive agents or independent brokers.  In the long run, we find that the premiums they charge fluctuate like pistons in an engine.
When one company’s pricing goes up compared to their competitors, an independent broker is able to offer their clients the option to transfer their insurance to a competing insurance company.  For the consumer this means that you get the best value for your premium dollar. 
Occasionally insurance companies change their underwriting approach, or reassess the risk factors for a particular client and elect to cancel the insurance.  Without the other options provided by a broker, this can leave you high and dry.

Who will you choose?

The choice is yours.  Insurance is the foundation of your financial plan and protects the assets you have accumulated throughout your life.