How Direct Writers and Independent Insurance Companies Compare

What’s the difference between working with direct writer insurance companies and independent insurance companies? Both can offer individuals policies for different types of insurance (home, auto, life, etc.), which is why on the surface, they can seem similar in function.

However, an important difference between the two is who you’ll be working with. Direct writer insurance companies employ direct writers that only sell insurance policies from their company. Independent insurance companies are made up of independent agents that aren’t obligated to represent any specific insurance company. While it may seem like individual insurance agents act as a “middle man” in the process, they can be very advantageous to policyholders.

That’s because independent insurance agents work for you, rather than directly for the larger insurance company. They’re not beholden to sell you policies from any particular major insurance company. Rather, their business is keeping your business. In fact, like a fiduciary, it’s imperative that they work to find the best insurance policies out there.

Direct writers (also known as captive agents) are employees of major insurance companies, and are in the business of selling more policies for their company. This isn’t to say you can’t find a policy that fits your needs from a direct writer. It’s just that their structure and incentives are inherently different from independent insurance agents, which at times doesn’t work in the best interest of the policyholder.

When dealing with a direct writer, you’ll be provided with options from one major insurance company. In this case, it’s up to you as the end consumer to make any comparisons between different insurance company policies and identify what’s truly best for you.

Think about the difference between direct writers and independent agents like the difference between how you could go about booking a Caribbean cruise. You could call a cruise ship company (the direct agent in our scenario) to learn about their upcoming trips; or, you could work with a travel agent (the independent insurance agent) who is not loyal to any specific cruise ship company. He or she will present you with a variety of trip options based on your desired needs.

With an independent insurance company, you can stick with your agent even if you want to switch major insurance companies down the road. This is advantageous because you can build a relationship with one agent over time. The personalization that comes from an independent insurance agency is also helpful when you’re looking to better understand the complexities of an insurance policy or identify your specific needs. Independent insurance agents are both licensed experts and personalized advisors. Part of their job is making complex topics simple for their clients, regardless of which companies they’re assessing.

Did you know that your independent insurance agent is also your advocate to the larger insurance company whose policy you’ve purchased? If you have to file a claim, dispute a ruling, or change a policy, your independent insurance agent can work directly with that insurance company and ask the right kinds of questions. For example, if your rates increase significantly, your independent agent can press the insurance company to justify their reasoning for the hike. Direct writers may be less likely to take that same initiative on behalf of a policyholder, because they’re ultimately loyal to the company.

While it’s important to choose the type of insurance partner that works best for your specific long-term needs, independent insurance agents can ultimately provide a level of personalized customer service that’s less common from direct writers at major insurance companies.

To learn more about which type of insurance partner is best for you, reach out to the insurance experts at Schechner Lifson Corporation!