Direct Writer or Independent Insurance Agent?When you buy insurance to protect your investment property, there are two distribution models you can choose from Direct Writer or an Independent insurance agent. The agent who works for a Direct Writer is an employee of the company and represents one company. If your property does not fit the risk profile they like, you will have to seek an alternate solution. Examples of companies that use the Direct Writer model: are Allstate, American Family, Country Company, Farmers, and State Farm. Direct Writers primarily write Personal Lines insurance, Home, Auto, Boat, and Umbrella. As of 2016-2017, Direct Writers wrote nearly 65% of all Personal Lines insurance. Your Independent Insurance Agent represents you, the client, first. They work to match your risk with the best carrier option available through the carriers and programs they represent. Each independent insurance agency contracts with the insurance companies, managing general agents, and wholesalers they represent. As of 2016 -2017, Independent Agents write premiums. The insurance companies include both national and regional brands. Examples of national carriers represented by independent insurance agencies include AIG, AmTrust, Chubb, Cincinnati Insurance, Liberty Mutual, Nationwide, Safeco, Travelers, The Hartford, Travelers, Zurich, etc.
Smaller regional carriers active in the Northwest include CIG, Oregon Mutual, Mutual of Enumclaw, Western National, etc. Managing General Agents, MGA’s, look like an insurance company but are a targeted market program. The MGA program has the financial backing of an insurance company, but the MGA handles the sales, underwriting, and claims of the program. Examples of programs are AmWins, Deans & Homer, and Middle Oak. Wholesalers are an additional layer of coverage options available to independent insurance agents. They have the flexibility to provide solutions for properties and coverage beyond the admitted markets’ appetite. When the standard markets decline a risk, the wholesale markets are the solution. Lloyds of London is an example of the carriers offered by wholesalers that most insurance buyers recognize. Who is helped most when buying from an independent insurance agent? Real estate investors who are growing their business, ground-up new construction, value add capital improvements on older properties, or operate in areas of significant weather-related claim risk are more likely to find coverage through independent agents versus direct writers. Direct writers prefer properties that are newer, completed, and occupied.
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