How an Independent Insurance Agency Works - YouTube

Hey this is Jeremy from Shine Insurance. Our video today is all about What is

an Independent Insurance Agent. I get this question all the time because at

Shine Insurance we are independent insurance agents. "What does that mean?"

and all these questions always come up so i thought i'd just resolve that in a quick

video right here. The best way to describe what an independent

insurance agent is is to talk about the three ways to get home

auto or business insurance and therefore show you what's available and

what the different options are. So the first one is to sign up online or call

an 800 number by simply going to your online spaces and getting insurance on

your own.

The second is what's called captive agents and i'll describe that in a

second. The third is an independent agent. So let's start at the very

beginning. You can definitely go online or call an 800 number and get

insurance all by yourself.

It's very easy, it's very quick, and you are on your own in doing so. More and

more people are doing that. More and more commercials are being shown for those

kinds of companies so that certainly is one way to go about getting your

insurance. Some examples of those are companies like Liberty Mutual Insurance or Safe

Auto, Basially a lot of the ones you see in commercials are

available online or through an 800 number.

The second is through what's called captive insurance agents. These are

folks that usually have a local branch of a large insurance company. The term

captive refers to the fact that those folks work for one specific company. They

work for the company, therefore they are captive to that company. They can't go

out and look at other companies, other options. If you're calling them for

insurance they're going to show you what is available with their insurance

company. Some common examples of those are State Farm, Allstate, or Farmers.

Generally, those folks have local spaces you can go to if you want to walk in the

door of their agency, shake hanks with an actual human, you can do that. As

far as how they're paid (because I get that question a lot, "how are different

folks paid for the work they do")

agents of a captive agency are generally paid a salary. They work for the

company, they're paid a salary. They generally get

performance bonuses associated with how many folks they bring in the door as well. So

that brings us to independent agents. An independent agency is an agency that

provides access to multiple insurance companies and advises about which one is

best for you. So independent agencies make relationships with multiple

companies. They go out to those companies and say "hey you're a great company we

would love to work with you. Would you like to work with us?" They do

that with multiple different companies. It could be two companies, it could be

five, it could even be 10 or 20. Different agencies work with different amounts of

companies but all independent agencies work with multiple companies. The

companies have to know going in that if they're working with independent

agents there's going to be competition in that agency. In a captive agency

there's no competition. The people work for the company, there's no other

companies there. In an independent agency there is competition amongst companies

inside that agency. Because the agency has multiple companies that they're

working with, the companyies independent agents work with are different than the

captive companies. I get the question all the time

"Can you offer me State Farm or Allstate or Farmers?" The answer is "No". I don't

work with those companies because they've made a choice. They have chosen

to have their own agents in towns around the country instead of working with

independent agencies. So companies have to make a decision: Do they want to

work with independent agents knowing that there will be competition in the

agency or do they want to have their own captive agents in town and just have no

competition in the agency? As far as how independent agents are paid, its

different as well. Generally speaking independent agents are paid a percentage

of your insurance premium. So if you decide to work with them and you pay, let's say,

$1000 for your insurance policy, the insurance agency is going to

get some cut of that premium. So in essence and an independent insurance

agent is free to you. The number that is sent to you as the quote, that's how

much your auto, home, or business insurance is going to cost.

That is the bottom line number you'll be paying. But a

little bit of that money comes back to the agency and that's

how they make their money. To set up a graphic, let's break down

four different parts. Obviously there's lots of different things to think about

when you're thinking about which insurance company to work with but

here are four examples of the difference between these three options. Let's start

with speed. You want to get a quote, you need it right now, you need it quick.

Well the best option here's probably online or 800 number.

The reason is it's very automated. You're going to go online. You're going

to plug some information and they're gonna pop a number out and if you like

it, you're just gonna go for it. So speed

generally speaking is going to be better if you work with online or 800 numbers.

As far as local, captive agents and independent agents are

generally there locally. So there's an office you can walk into, shake hands

with your agent, sit down and talk about your policies if that's what you want to

do. Ao as far as local goes, captive and independent are your best options.

You're certainly not going to have that option if you're working with an online

or 800 number company. They're simply not local and you know that going in. As far

as quality and when I'm talking about quality what I'm trying to say is the

quality of your insurance policy. That it's been put together properly. That it's

going to have coverage for you when those bad things happen.

Who's going to provide you with the best quality policies and the best quality

companies. Well, in general, the the access point that has the most options is going

to give you the best quality because those independent agents have multiple

companies they can look at. One of the things independent agents are

constantly looking at is the quality of the policy that the companies

are providing. If the company doesn't have a good quality policy i can

move on to another company. I don't have to stick with that particular company

and so I'm more likely as an independent agent to provide you with

quality coverage in a quality company.

Alright the last one. Well let me just back up and say the one that's

going to have the least amount of potential quality is going online or to 800

numbers. With a captive or an independent you have people who are looking at your

policies and making decisions about what to offer you.

You're much more likely to see quality from an independent agent and even a

captive agent then you are from online

or an 800 number where they're really not paying any attention to what you're

purchasing. You're making all those decisions on your own without really any

advice and so the chances of the quality being low are very high. That's one

of the problems with going online or to an 800 number. OK, finally price. Now I'm

going to come to a conclusion here in just a second but I should preface it by

saying no one can say they have the best price. Price depends on so many

different things at so many different moments in time. When you decide to look

for insurance, that is a single moment in time. Any company may have the best price

at that moment, it doesn't mean that price is going to stay the same.

Companies prices fluctuate year after year. Sometimes going up sometimes (not as

often as we'd like it to) going down. In general though, an

independent agent is going to know the ebbs and flows of price in the

marketplace and be able to offer you a company that is the strongest

combination of price and quality at that given moment. More importantly, as time passes, if

that company's price gets worse or goes up, an independent agent is

going to be able to say, "you know what. You're with this company. They've taken

great care of you.

But their price is not as good as some other companies right now. Here's another one I can

offer. You've got a choice. Do you want to stick with that company that you trust

and you know or do you want to switch over to this other company and work with

them because their prices better?" The great thing is even if you do change, you get to stay with the

independent agent. You don't lose your local personal relationship when you

change from one company to another. As a result, what I see when I'm up

against independent agents, when i'm looking at someone's policy that they

already have and they're thinking about coming and working with Shine is that if

I'm up against an independent agent i have a harder time showing a much better

price then if i'm up against captive agents. This is because they're simply not

offering you any other options but the single option they have. So they're not

going to tell you necessarily if their price is worse than everyone else. I mean

if they've got the worst price in town that's still the only company that they

have to work with. So in general for those reasons independent agents tend to

to have better price. OK, so "What is an Independent Insurance Agency. That's the reason

you started watching this video, right? It's access to multiple, often exclusive,

insurance companies inside of one agency. The agency works for you not the company. So the

agent is not working for any company, the agent is choosing which companies to

work with. Obviously they have a relationship with those companies but

they don't work for the company and that works to your advantage if there's any

issues along the way. Your agent is

motivated by quality and good advice.

There's a reason you go to an independent agent and it's to have an advisor

You want access to great companies? Sure. You want access to good

policies? Absolutely. But you also want access to good advice and in general

you're going to get that in an independent agency in a way that you may

not be able to get in a captive agency. You're certainly not going to

get if you go online or go to an 800 number. You can usually find the best price

and coverage for reasons i already described. Finally, insependent agents help during

claims. Most captive agents and certainly the 800 numbers are not

going to be an advocate for you during claims.

In fact, most captivates don't even get involved in the claims process. So if

you have a local agent who helped you to put the policy in place and then you

have a claim you're really going to be working directly with the company.

That agent is not going to be able to help you out. With independent agents,

that's different. You'll still be working with the company during a

claim because the company's ultimately who is paying out the money

but if you need your local agent to help you, if there's something going on in

that claim that doesn't seem quite right, your local independent agent

should be able to help you out as a mediator as a person that comes between

your perspective and the insurance company's perspective. It's one of my

favorite things personally to do. To really pull those two things together

and take a potentially bad situation potentially and help my clients understand

exactly what's going on. I I tell my them all the time that I don't always have

the information you want to hear but I have the information that will help you

understand why things

are the way they are. In claim situations that's so important to just

be able to understand. So often claims are confusing and an

independent agent can help you make sense of it.

Alright, that was "What is an independent insurance agent". I hope that you

understand things a little bit better. So what about other Shine videos? We've got a New

Home Buyers Guide out there. If you haven't gone to our channel and checked

that out. If you're in the market for a house, the first place you should go

is this video and our new home buyers guide that you can download underneath

the video to help you walk from beginning to end through the process of

buying a new house.

Auto Insurance Explained - if you ever just want to understand the details of

your auto insurance policy whether you're in an at-fault state or a no

fault state, Check out our two videos on auto insurance.

Finally if you just want funny,

we've got a video called How Not to Light a Bonfire. Don't think I need to go

too much deeper into that. Well go ahead and check that out and see someone

behaving incredibly poorly and maybe laugh a little bit.

Finally, two last things we need you to do. As always

the last step in the video is to subscribe to our YouTube channel. If you

like the information you learned in this video, we've got multiple videos that do

exactly what i did here: just as quickly and simply as possible explain some part

of the insurance world. And please go ahead and share this video with other

folks in your social media world. I always say "good information is only great when

it's shared with others." If you learned something here, if you feel like you know

independent agents better than you did before,

go ahead and pop that out in your social media world and let other people

experience it as well.

Okay well that's the end of this video. Hope you enjoyed it, Until the next time,

have a wonderful day!

go to www.shineinsurance.com for more