Secret #93: Let’s call the whole thing off! (All about Agents)

 Independent Agent, Captive Agent, to-may-toe, to-mah-toe: Let’s call the whole thing off! *

  •  What’s the difference between independent and captive agents?
  • How does an insurance company differ from an insurance agency?
  • Why does it matter?

In this article we will sort out the differences and explain why it is important to know.

The bonding company is like the manufacturer of the product. The bonding agent is the manufacturer’s rep, the sales person who performs the retail side of the transaction.

When it comes to bid and performance bonds, most contractors obtain their bonds from bonding agencies. However, some may be dealing directly with bonding companies and not appreciate the difference. Actually, there are important implications.

The “Big I” is the symbol of the national organization: Independent Insurance Agents and Brokers of America Inc. You can also find their information under the “Trusted Choice” logo. This is a national organization with 140,000 member insurance agents. They serve the retail function as intermediary between the insurance company and the retail customer (contractors and others).

The alternative arrangement is to do business directly with the insurance company.


In this scenario, the customer is dealing with a captive agent directly employed by one insurance company and whose products are all that the agent may offer. They are chained to the one company.

The difference is significant and important for customers to understand. The Trusted Choice (Independent Agents) tagline is Free To Do What’s Right For You. That’s the whole point: An independent agent is free to offer the products of many insurance/ bonding companies, and find the one that’s best for you in the process. To put it simply, captive agents must fit you into one of their company’s products or risk not making a sale.

When it comes to surety bonds, the same holds true. The independent bond agent has access to a number of sureties (insurance companies) and can find the best one for the customer. The companies may even compete for the business resulting in better terms for the client.

The captive agent must offer the products and programs of their employer, even if the client is a square peg in a round hole.

Let’s stop for a moment and review what we have learned:

  • There are insurance companies and insurance agencies
  • The insurance company is the provider of the product and they hold the risk
  • The insurance agent, also known as the bond producer, is an intermediary and the channel between the customer and the insurance or bonding company
  • Insurance/bonding agents come in two flavors: independent and captive
  • Independent agents represent a number of companies and can shop the entire market to find the most beneficial solution for the customer
  • Captive agents work for one insurance or bonding company and only offer their products

At this point, it may all seem pretty clear. You understand the differences and may have decided which you like better: independent agent or captive. Now, the only point of confusion is to recognize which one you’re dealing with.  Independent agents are likely to point out that they represent a broad range of markets (insurance companies) but a captive agent may not mention they only have access to one company.

Do you have a to-may-toe or a to-mah-toe? Do you have an independent or captive agent?


“What markets do you represent?” If the answer is a single company, you are talking to a captive agent who does not provide access to a variety of markets that may compete for your business.  If they rattle off a list, “We have Company A, Company B, Company C, etc…” that’s an independent agent.

FIA Surety is a NJ based bonding company (carrier) that has specialized in Site, Subdivision, Bid and Performance Bonds since 1979 – we’re good at it!  Call us with your next one.

Steve Golia, Marketing Mgr.: 856-304-7348

First Indemnity of America Ins. Co.

*  “Let’s Call the Whole Thing Off” is a song written by George Gershwin and Ira Gershwin for the 1937 film Shall We Dance where it was introduced by Fred Astaire and Ginger Rogers as part of a celebrated dance duet on roller skates.  The song is most famous for its verses comparing different regional dialects.  Watch it!



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