Exclusive Insurance Agent Agreement

Dale Marshall began writing for Internet clients in 2009. He specializes in topics related to the fields in which he has worked for more than three decades, including finance, insurance, industrial relations and human resources. Marshall holds a Bachelor of Arts in Communications from the University of Connecticut. Some exclusive agents have agreements with their flagship companies that allow them to sell competitors` policies if the flagship does not have a comparable line of insurance. For example, if a customer needs auto insurance and a Medicare Supplement policy and the flagship product offers only one, the agent can sell another company`s policy. However, the majority of the company that a written agent must be for the flagship company. The main reason an insurance agent will work as an exclusive agent is financial. The company typically offers an office, administrative staff to handle paperwork, ongoing training, significant bonuses and other incentive programs, as well as an impressive national advertising budget. When consumers react to advertising, the company redirects them to an exclusive sales agent in their area and usually provides agents with long lists of potential customers. Although some exclusive agents earn a salary, most are independent contractors and only earn a commission based on their sales.

Exclusive agents usually earn commissions on their renewals as long as they remain contractually associated with the issuing company. The remuneration of exclusive and independent agents is based on sales. Independent agents are paid strictly on commission by each of the companies they represent. Some exclusive agents may have a salary structure in combination with their commissions, but ultimately, the larger an agent`s output, the higher the compensation. Independent agents typically earn a significantly higher commission than exclusive agents, for which the company bears the most overhead costs. This difference can be as high as 50%, but independent agents have to pay their own overhead. To meet these costs, many independent agents join independent agencies and contribute to the cost of running the agency. An independent agent represents several insurance companies that have hired the agent to sell certain lines of insurance on a non-exclusive basis. Although independent agents do not benefit from the support provided by the company, they do have several advantages over captive agents, including the ability to compare on behalf of the client. Independent agents also dominate the commercial property and casualty insurance industry with around 80% of the market. However, you usually can`t sell the policies offered by large companies that are heavily marketed and very popular. Independent agents also own their own general ledger and earn renewal commissions as long as they maintain a contract with the issuing company.

Exclusive insurance agents or captive agents are hired to sell policies for a single insurance company; Independent agents can sell policies from many different companies. In both cases, agents must be licensed in the state(s) in which they operate and are limited by the scope of those licenses. For example, agents with a Life and Health licence can only sell life and health insurance, while agents with a property and casualty insurance licence can sell auto and home insurance. In addition, all agents can sell annuities, but a securities license is required to sell variable annuities. .