In learning the fundamental facts about auto insurance carriers in the United States, it’s important understand about the two types of Auto Insurance Agents Contracts.
The Captive Auto Insurance Agent.
A Captive Agent is an auto insurance agent which is employed or contracted by one specific Auto Insurance Company. Their agency contract specifically states the agent can only write Auto Insurance Policies for that one specific auto insurance carrier. Allstate Insurance Company is an example of a company which has a captive insurance agency agreement. Since a captive insurance agent is limited to one insurance company, as long as everything is hunky-dori and you have not problems, you may be happy with your rate. Your agent has most likely stated you have the best rate and shopping would be a feutal enterprise. When you only have one company, what else can you do but do your best to keep your customers from shopping. The problem is, the industry has changed drastically. In my opinion, the captive agent has sees his or her best years behind them.
The Independent Auto Insurance Agent.
An Independent Agent has no restrictive contract. An Independent Auto Insurance Agent may sign a contract to write auto insurance with any carrier he/she pleases and is not bound by the exclusive rules of any one specific auto insurance carrier like Allstate, GEICO, Nationwide and State Farm.
What most insurance shoppers don’t realize, the same captive carriers like Allstate and Nationwide also own insurance carriers which are represented by the independent agent community. Encompass Insurance Company is an example of an Independent agency contract. What many people don’t realize is; Encompass Insurance Company is a wholly owned subsidiary of Allstate Insurance Company. The rates offered by the two companies are very similar. Nationwide has the same arrangement. Although they have captive agents, they also have independent agent carriers. Titan and Victoria Insurance Company are carriers owned by Nationwide Insurance Company.
The management of both Allstate and Nationwide as very smart. Allstate and Nationwide Insurance Company’s realized many years ago; as a Captive Insurance Company – they were not addressing a segment of the auto insurance marketplace. They asked and answered the critical question; Why have only captive agents representing Allstate when purchasing Encompass Insurance Company will give us access to the Independent Agency Channel?
InsureDirect.com has proudly represented these carriers since 90’s. There’s no better honor than being a proud member of these insurance families.