A local, Independent Insurance Agency (or broker) is the best way for a family to insure their home, autos, boats, RVs and everything else.
To understand why an Independent Agent has an advantage on behalf of its clients, it is important to understand the basics of the insurance marketplace and how the “product” of insurance is delivered to the customer.
The insurance marketplace is divided into 3 major categories: Direct, Captive, and Independent. A summary of each category follows below.
Direct-to-customer insurance customers are familiar to most people because of the enormous amount of money they spend on advertising. The GEICO lizard, Flo the Progressive waitress and even “the General” are the characters that familiarize you with their brand and marketing. Their marketing does a great job of keeping their brand name top-of-mind. Some of these companies are web-based, others still use an 800# with call centers to assist their policyholders. GEICO took the step of opening local offices, but in 2022 they retreated back to the web when they closed all of their CA offices.
They enjoy broad name recognition, but no single carrier is competitive everywhere, or even wants to insure homes or autos everywhere. For example, Progressive is a direct writer who advertises broadly across the nation, but here in CA they are primarily a carrier that insures higher-risk drivers. A potential client won’t know that until they have spent time on the phone with them getting quotes only to find out they are not getting the coverage or the price they had hoped.
Broad brand appeal doesn’t always translate to the best deal for the client.
Captive agents are also part of well-known insurance companies with national marketing programs, such as State Farm, Allstate or Farmers. They have local offices, which are usually locally-owned franchises. The captive agent has the local advantage, they are part of the community and more importantly they understand the local dynamics of the insurance marketplace. A State Farm agent in a high-brush mountain area will be an expert in those risks. They can also be efficient – a captive agent only knows their carriers’ systems, underwriting and discounts and their policy features.
But the efficiencies of a captive can also be their disadvantage. If a captive agent’s parent company takes a large rate increase in their area of a State, that agent can’t do anything to bring down cost. Sometimes a captive carrier will pull out of an area (or State) completely, leaving the policy holders in a situation where they must accept a large increase and/or find a new carrier at their renewal.
It’s good to be a client of a captive carrier when that carrier chooses to be competitive in your particular area, but how would a client know when that is the case?
Independent Insurance Agency (Broker)
An Independent Insurance Agency has the local advantages of a captive agency (local knowledge of community, policies & underwriting risks) without being tied to a single insurance company. They are not franchises, rather they are locally owned businesses who contract with many Independent companies such as Safeco, Mercury or Travelers. The advantage of a broker is that they work for the client, not the carrier, which allows them to always focus on the right coverage as the first priority. An Independent Agent knows both their clients’ risk situation (Teen drivers? Boats or toys? Collections?) and they have the option of choosing the best carrier for that clients’ specific needs. Many clients will be a good fit for multiple carriers, so the Independent agent can place the coverage with the carrier who offers not only the right coverage but the best price, too.
Purves & Associates is an Independent Insurance Agency, and we know that we are biased when we say that we have the most advantages for our clients.
And every time we see something like GEICO closing their offices or a captive carrier non-renewing large swaths of policies, we are reminded that the Independent Agent has the most options for providing the best coverage at the most competitive rates to all insurance buyers.