What is a captive insurance agency?
Asked by: Miss Verlie Trantow | Last update: January 14, 2026Score: 4.1/5 (69 votes)
What does a captive insurance agent mean?
A captive agent is an insurance agent that works for only one insurance company. Captive agents only sell the products of the insurance company they work for and cannot help individuals outside of that offering. The opposite of a captive agent is an independent agent that works for many insurance companies.
What is the purpose of a captive insurance company?
A "captive insurer" is generally defined as an insurance company that is wholly owned and controlled by its insureds; its primary purpose is to insure the risks of its owners, and its insureds benefit from the captive insurer's underwriting profits.
What is an example of a captive company?
When it comes to the auto sector, captive finance companies offer car loans to buyers in of need financing. Some examples include General Motors Acceptance Corporation, Toyota Financial Services, Ford Motor Credit Company, and American Honda Finance.
What are the two major types of captive insurance companies?
- Pure captives: captive insurers that are 100 percent owned, directly or indirectly, by their insureds.
- Sponsored captives: captives owned and controlled by parties unrelated to the insured.
Unlocking the Secrets of Captive Insurance: Lower Your Business Insurance Premium
How do captive insurance agents make money?
Captive insurance agents make commissions based on the insurance policies they sell. Additionally, captive agents may receive bonuses and incentives for meeting sales targets and maintaining high levels of customer satisfaction.
Is Allstate a captive agency?
State Farm, Allstate, and Geico are all insurance companies that will only sell their products through their agents. They don't permit their agents to sell any products from any other insurance companies. Hence the word captive.
What is the downside of captive insurance?
Cons of a Captive Insurance Plan
Increased risk – With a captive, the owner-insureds put their own capital at risk. If a company experiences a high number of claims, that capital could be lost. This is why it's important to have robust risk management policies.
Is Geico a captive insurance company?
Unlike independent agents, who can offer a range of products from various insurers, captive agents focus solely on the offerings of their parent company. Well-known examples of companies employing captive agents include Geico, Progressive, The Hartford, and Farmers Insurance.
What is captive insurance for dummies?
Issue: In its simplest form, a captive is a wholly owned subsidiary created to provide insurance to its non-insurance parent company (or companies). Captives are essentially a form of self-insurance whereby the insurer is owned wholly by the insured.
What is the difference between captive insurance and regular insurance?
In a traditional insurance program, the insurance carriers take on all risks and retain all profits. With captive insurance, the captive participants share in the risk for a potential reward of lower costs, underwriting profits, and investment incomes.
Is it better to be a captive or independent insurance agent?
Becoming an independent agent offers numerous advantages over a captive agent, including the ability to represent multiple carriers, support when needed, being your own boss, and the potential for higher commission rates and earning potential.
Do captive insurance companies pay taxes?
Internal Revenue Code Section 831(b) provides that captive insurance companies are taxed only on their investment income, and do not pay income taxes on the premiums they collect, providing premiums to the captive do not exceed $2.2 million per year.
Why do companies set up captive insurance?
Captive insurance is essentially a type of self-insurance that allows a company to meet its unique risk management needs. Captives can be a good idea because they might offer lower costs, significant tax advantages, underwriting profits, and greater control over coverage and claims decisions.
Is Liberty Mutual a captive agency?
Liberty Mutual Management, a stand-alone unit within Liberty Mutual Insurance, provides our captive customers with experienced, tailored support for their programs. We support insurance and reinsurance for workers compensation, general liability, commercial auto, property, life, and other niche programs.
What is an example of a captive insurance agent?
A captive agent is an agent that generally represents a single life insurance company. Products and services are limited to the products of the represented carrier. Some examples of life insurance companies with large, captive agent field forces include Northwestern Mutual and New York Life.
Is State Farm a captive agency?
An example of a captive agent would be State Farm, Farmers, Allstate, etc. They only have one insurer/company to offer, so therefore they only have one quote to offer you as well.
Is Progressive a captive insurance company?
Progressive is an independent agency, with policies sold by independent agents. In other words, it is sold by agents who are not “captive” to Progressive and can sell policies from different carriers as well (like CoverHound does).
How do captive insurers make money?
In addition to paying claims, the captive insurer must also factor in other operational costs, such as general and administrative expenses and applicable taxes. However, the captive insurer does benefit by investing the premiums it collects from the policyholders before making claim payments.
Can you leave a captive insurance company?
You can choose to leave a captive if you desire. However, you can certainly be asked to leave. Here are some reasons why businesses leave a captive insurer: Acquisition: This is probably the most common reason a business would leave.
Are captive insurance agents employees?
Captive agents are typically full-time employees compensated with a salary, benefits, and commissions.
How much does it cost to buy an Allstate agency?
Allstate would like to see you have a minimum of $100k available to get your business up and running. Your local Allstate sales leader can help you determine the specific capital requirement necessary for any business opportunities available in your local market. Note, Allstate does not take possession of your capital.
How many captive insurance companies are there?
Today there are over 7,000 captive insurance companies registered and licensed in more than 70 domiciles around the world.
Are farm bureau agents captive?
Insurance companies such as State Farm, Allstate, Farm Bureau, and Farmers all sell their insurance products through a captive agent.