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The difference between the two types of auto insurance agents is the
captive agent works on an exclusive contract with one company while the
independent agent usually represents several companies. Some advantages
to using independent agents include their ability to shop the market for
the best possible rates and coverages for your situation.
They are not bound to any one company, therefore their loyalty is to you,
not the
insurance company. A captive agent's loyalty is to the insurance company.
The
major reason for not providing what you need is the limited scope of products
and
choices he or she has to offer. The major disadvantage of an independent
agent is
some agents will switch you from company to company, telling you they
found a
cheaper rate, when in reality they are looking out for their commission
checks. Let
me explain what I mean. Normally, when a policy is written, the agent
receives a
commission. When the policy renews, the agent again receives a commission.
The problem is the renewal commission is smaller than the new business
commission,
so by switching you from company to company the agent earns a higher commission.
Loyalty, Is There Any?
Most people assume that if they stay with an auto insurance company for
a long
time, they will create a loyalty between the insurance company and themselves.
That is true to a minor degree. Many companies do offer programs such
as longevity
discounts up to 15%+, for customers insured with the company for X number
of
years. However, a majority of the time you're not getting a good rate
in those first X
number of years. It's like a jewelry sale where they cut the price in
half on an
already overpriced product and after the discount it's still overpriced.
The only other
possible advantage for longevity with an insurance company is in the event
you
need an underwriting exception for a situation that has occurred. An example
of an
exception would be as follows. You purchase an additional vehicle, and
when you
request the vehicle be added to your policy, you discover that the speeding
citation
you received last year will keep you from getting the best possible rate.
Your agent
could request an exception from the company and, if granted, the company
overlooks
the citation and gives you the lower rate. This would be expected if you
have been
with an insurance company for a long time and your account has been profitable.
However, I've seen cases of long time clients not getting this kind of
service because the company decided no more exceptions, leaving the customer
out in the cold!
Each company files its rules with the state department of insurance. Anything
they do differently from what is filed is an exception. They don't like
to give exceptions but if enough pressure is applied they will. One reason
they don't like to give exceptions is they are audited by the insurance
department and have to give an
accounting for all exceptions given. In spite of this fact, they do give
exceptions to
whomever they wish, whenever they wish.
What you and I consider loyalty to be in a relationship is almost non-existent
in the insurance business. The name of the game now is big business, big
dollars
and bottom line results'. It has to be that way because the business of
getting your
insurance dollars has become so competitive and changes so rapidly that
the days
of loyalty and relationships are a thing of the past. / would say for
the most part,
loyalty to you from the insurance company means little to nothing, and
should
not be considered as a factor in changing companies
Agent loyalty is quite a different matter. The agent is paid on a commission
only basis, and therefore, is more concerned about your welfare. If you
are loyal to
a good agent, that agent will be loyal to you doing all he or she can
to service your
account. Agents possessing a loyal attitude probably represent 60% to
70% of all
agents in the business.
Remember, the agent is a puppet of the insurance company and there is
very
little he or she can do for you that the insurance company wouldn't allow
you to do
without an agent. Also, remember the role of the agent today will become
far different
in the future. So again, it's time to look out for yourself and consider
acting as
your own agent!
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