3:53 AM
macky
Chubb Insurance
All too often consumers are led into purchasing policies that do not provide even remotely sufficient insurance to protect them from the effects of reasonably anticipated losses. It is crucial that you understand insurance well enough to be able to ask the necessary questions so you can assess the abilities of the potential insurance agents you contact and can help whichever agent you ultimately choose to procure insurance appropriate to your needs.
There are three primary marketing channels of property and casualty insurance, particularly homeowners and personal auto insurance, in the United States. They are:
1. independent agents;
2. captive agents; and,
3. various forms of direct marketing.
This latter category includes what nominally appears to be a variety of marketing channels often using direct mail. These channels are employed by GEICO, Progressive Casualty, certain American International Group mass-marketed insurances, often by direct mail as well as other regional and national carriers, such as 21st Century Insurance (a primarily personal auto insurance carrier operating in California, Arizona, Nevada, Washington, and Oregon).
In some cases, a given insurer may employ multiple marketing channds.
INDEPENDENT AGENTS
An independent insurance agent is a person who is licensed by the department of insurance in the state (or states) where he or she conducts business. Licensure generally involves passing a written examination to show that the person meets minimum standards of knowledge regarding the business of insurance.
Independent agents are typically parties to contracts with several insurers by which the agent is authorized to write business (i.e., policies) for that insurer. In most states, each insurer files a notice of appointment of each agent with the department of insurance in that particular state. Independent agents are usually compensated by the insurers they represent through payment of a commission that is a fixed percentage of the premium of each policy sold. This commission percentage may vary with the size of the premium or line of business.
For example, insurers often pay higher commissions on commercial lines policies than they do on personal lines policies. This is due in part because the underwriting and production of personal lines policies is often less complex, presenting fewer variables, and typically involves smaller premiums per policy. The administrative costs to the insurer of issuing a commercial policy for a small business and a personal lines policy are roughly the same.
Independent agents frequently state that one advantage of dealing with an independent agent is that he or she often has the flexibility to obtain competing quotes from several insurers. These competing quotes may offer the insured broader or lesser coverage in response to greater or lower premiums, thus offering the insured a range of choices.
An independent agent will not have a State Farm, Farmers, Allstate, or Nationwide logo in their Yellow Pages ad, or over his or her office. Independent agents are often members of professional/trade organizations, such as the Professional Insurance Agents (PIA) organization or Independent Insurance Agents (IIA) organization. Their advertising in the Yellow Pages and otherwise will usually make clear that they are independent agents, especially the fact that they represent several companies.
In some regions, the Yellow Pages will have listings of agents who represent particular insurers that conduct their business even though they are independent agents - so checking by a particular name, such as Hartford or Kemper, may help you identify local independent agents.
CAPTIVE AGENTS
Captive agents represent only a single insurer. In some instances, they may even be employees of the insurer. Examples of captive agents are agents who sell State Farm, Allstate, Nationwide, and Farmers policies. A State Farm agent, for example, is limited to offering the policies offered by the State Farm companies. If a given customer seeks a type of insurance not offered by a captive agent insurer, the customer will end up having to go to another agent or broker to obtain a quote or a policy.
Nonetheless, the captive agent manner of marketing of insurance, particularly personal lines policies, Obviously has been successful. State Farm, Allstate, Nationwide, Liberty Mutual, and Farmers control a substantial portion of the United States personal lines insurance market.
However, if you really want to comparison shop for competing quotes involving considerations other than price from several companies, including from one or more captive agent companies, you will have to contact an agent from each company separately and compare the results on your own.
The most important thing the consumer needs to do is locate a competent agent. While there is no single yardstick by which to gauge an agent's competence, things to inquire about include:
- education level (i.e,, is the agent in question a college graduate? - sometimes the ability to spot issues is crucial);
- how many years of experience does the person have as a licensed agent?;
- whether the agent is a member of any of the professional insurance associations. While not a perfect measure, such memberships can indicate a level of knowledge and commitment to a business and career; and,
- whether the agent has a chartered property casualty underwriter (CPCU) designation.
There are competent and professional agents who are independent agents, and who are captive agents. You just need to understand enough about the various marketing channels to make a decision Which form makes the best sense for you. To learn more about insurance and how it works, you can get Secrets Of Insurance right now!
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