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Insurance agent commission structures vary depending on whether the agent is captive or independent. Knowing the difference can help you choose a career path.

Insurance agents make a lot of their money on commission. How commissions work depends on factors like whether the agent is captive or independent.

If you’re considering a career in the insurance industry, it’s essential to understand:

  • How commissions work
  • Which agents make the largest commissions
  • How you can maximize the commissions you make while also representing the interests of your clients

How Insurance Agents Make Money

Insurance agents make money from commissions and fees on policies they’ve sold. Most agents make a percentage of the policy’s annual premium. The most considerable sum comes against the first-year premium, and then agents make a smaller ongoing income over the rest of the policy’s life.

Captive Agents

Captive insurance agents work specifically for one insurance company and only sell policies from that carrier.

These agents make a modest salary and also receive commissions on the policies they sell. The commissions they produce are smaller than the commissions earned by independent agents.

Independent Agents

An independent agent is an insurance agent that doesn’t work for a dedicated insurance company. Instead, these agents sell policies from insurance carriers with which they have agreements.

Independent insurance agents do not earn a salary but instead work strictly off commission. These agents earn a higher commission than captive agents.

Other Ways Insurance Agents Make Money

Independent agents (not captive agents) also make money by providing consultation services to clients, initiating changes, and assisting with filing claims. For these services, agents can charge fees. The amount and types of fees charged vary by state.

How Independent Agent Commission Structure Benefits Clients

Independent agents do not receive a salary because they don’t work for a specific insurance company. This means they’re free to help clients pick the right policy for their needs, from whatever insurance carrier offers the plan, rather than pushing them into a less-than-ideal policy for their circumstances.

Captive agents must choose from plans offered by their dedicated insurance carrier.

Giving clients the option to shop around makes it easier for independent agents to serve their clients truly. This is especially important because many clients find choosing the optimal policy daunting, and some will choose less-than-ideal policies when left on their own.

Building Relationships With Insurance Carriers Is Key

Independent insurance agents are in a unique position to meet the needs of their clients and make more commissions by offering a wide range of insurance policies to their customers. The best way to do this is by building relationships with insurance carriers to offer as many policies as possible to clients.

It’s also vitally important for insurance agents to develop expert-level knowledge about each policy. Having this level of expertise will help clients choose one policy over another, even if the policies are only subtly different. Clients want this from their insurance agents: guidance and sound advice, in good times and in bad.

Clients who feel confident that they’re getting the best policy for their circumstances and who have confidence in the competence of their insurance agent are more likely to return the following year and in years to come. This also generates more revenue as word-of-mouth spreads.

Expand Your Offerings With An Insurance Cluster

Joining an insurance cluster helps you build more relationships inside the insurance world and offer more insurance policies to your customers. When you partner with, you gain access to some of the nation’s top insurance carriers.

Our carrier partners include some of the most well-known insurance agencies in the country, so you can offer a wide range of policies for each client. Become the agent you’ve always wanted to be. Join . Contact us today to learn more.