Types of Insurance Agencies

Types of Insurance Agencies

Are you new to the insurance business, or looking for some talking points for your clients? Read on to learn more about the basics of types of insurance agencies.

Experts recommend that when you are in the process of purchasing insurance policies, it is a good idea to try to know and understand the insurance companies that you are dealing with. You may receive quotes from these different types of insurance companies.

It is best that you know the type of insurance company you are dealing with so you can make better decisions and you get the best out of the insurance policies you purchase. The different types of insurance companies are direct sellers, captives, independent agents, standard lines, excess lines and Lloyd’s of London.

6 Basics of Types of Insurance Agencies

Direct Insurance

Direct seller or direct insurance is an insurance carrier without agents. You will deal directly with the company. Often, you will deal with them online or over the phone.

They may have field offices to allowing you to transact with the company if they have such office in your area. Typically, direct insurance is preferred by millennials, the younger people who prefer to purchase and manage their insurance policies at their own time.

In addition, some direct insurance carriers target specific markets. For instance, one direct insurance carrier targets senior citizens. Another targets the military.

To get a quote from direct insurance carriers, you just have to visit their website. You key in all the necessary, relevant information. Then you get a quote. You may also contact them over the phone.

Captive Insurance Agents

A captive insurance agent works for and represents very large insurance carriers which offer a wide variety of insurance products. A captive agent is typically well trained on the different insurance products of the insurance carrier he/she represents.

When you contact a captive agent, he or she can immediately tell if you qualify for a certain insurance policy. The captive agent will also be able to quickly give you a quote after a few questions. Another advantage of dealing with a captive agent is personalized customer care.

He or she will be able to assist and make good recommendations when you purchase insurance. Agents also handle billing and payments. They give you assistance in the claims process. Further, they may be able to make you understand should there be changes and updates on your policy and premiums.

Independent Insurance Agents

Just like a captive, an independent agent works for and represents carriers. While a captive agent represents a single, very large insurance carrier, independent agents may represent several insurance carriers or parent companies.

An advantage of using an independent agent is that you get quick, multiple quotes from different insurance carriers at once. The more quotes from several insurance carriers you get, the better chance of finding the best rate for you.

If you are able to establish good working relationship with your agent, he or she may be able to give you better deals if your rate changes. For instance, when an agent knows that the carrier’s rate is increasing, he or she may try to find you a better deal before the increase takes place.

Just like the captive agent, an independent agent gives you personalized customer care. He or she can give the same services given by a captive agent- handling billing and payments, answering queries, giving advice, giving assistance during the claims process, etc.

Standard Lines Insurance Carriers

This is an insurance company that is authorized to offer specific lines of insurance in a particular state. A standard lines carrier is also known as admitted carrier. This type of insurance company is regulated by the state board of insurance in the state or states where it offers coverage.

It is also subject to the laws and restrictions of the state(s) in which it operates. Further, such type of insurance company must contribute to a state guarantee fund. This fund will be used to pay claims when the insurance company becomes insolvent.

Excess carriers

It is also known as surplus lines carrier. Typically, it is not regulated by the state.

his type of insurance company mainly covers specialty risks not covered by standard lines or admitted carriers. Policyholders with unique risks or those with poor loss history who cannot obtain insurance directly from standard lines can acquire insurance policies from excess carriers.

For instance, high-risk individuals who cannot obtain auto insurance from standard carriers may do so from excess or surplus carriers.

Lloyd’s of London

This is not an insurance company, but an insurance market where insurance buyers and sellers come together. It specializes in insuring unusual or high risk items. Examples of risks insured in this insurance market are celebrity body parts and offshore oil risks. This market caters to the main street or the more common types of risks too.

In the end, experts suggest that you should go with a policy that meets your insurance needs and you deal with an insurance company/carrier that you are comfortable with.

1 thought on “Types of Insurance Agencies”

  1. It’s good to know more about insurance agencies. I can see why direct insurance is nice, since you can just deal with everything on your own time. I guess I’m considered a millennial, so I fit right in with everyone else there!

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