“The chains that bind us the most closely are the ones we have broken,” wrote Argentinian poet Antonio Porchia. This is especially true for captive agents, who often believe their business model imposes conflicts of interest. Some look enviously at independent advisors who they believe can sell whatever they want.
However, as the poet suggests, the chains that bind are mainly in our minds. Captive status is not nearly as restrictive as it appears. For one thing, captive insurers know they can’t survive with outdated products. When product innovation occurs (e.g., annuity living benefit riders), they must react quickly or fall behind. So a captive agent usually has more than enough good products available.
For another thing, captive agents typically have a base-plus-incentive compensation model. This means they can afford to research product options more thoroughly instead of moving quickly to the close. Sure, independents can theoretically search the known universe for the perfect client solution. But in practice can they afford to? A 100 percent commission model imposes chains of its own.
Another virtue of so-called captivity: the ability to offer optimized product packages that save clients time and money. Think about multiple-line agents offering homeowners, life, and umbrella liability, along with life insurance, annuities and other products, all readily available without doing extra research or having to get appointed with different companies.
The client experience