It’s no secret: the insurance industry is frustrating for clients. Heck, it might be frustrating for you. And when your client is stuck in the traditional market, they’re often left with more confusion than clarity. They’re spending a significant amount on premiums and still aren’t confident they’re being given the best advice. Just the easiest path for the carrier or agent.
As your client’s agent, you’re trying to protect your client’s business and reputation. But if the carrier is more interested in collecting revenue than providing real guidance, how can you trust that advice? You’re right to question it.
At Captive Coalition, we work exclusively with independent agents to help them identify when their clients are stuck in bad insurance programs. We understand the frustration business owners face in the traditional market, especially when providers keep clients in the dark about useful information.
This article breaks down why bad advice happens, how it shows up, and what alternatives exist so you can make better-informed decisions for your client.
Why Would Your Client Get Bad Advice From Their Carrier?
Every premium dollar your client pays is revenue for the carrier. There are many factors that go into your client’s premium. The higher the premium, the better for them. There is very little incentive for carriers to lower premiums, make life easier, or be fully transparent, especially when the traditional model relies on pooling risks and spreading losses.
Carriers are constantly reacting to losses across their entire book of business. That means even if your client has been the model policyholder like low claimsand solid risk management, they still get punished when others screw up. It’s not personal; it’s how the traditional market works. Everyone pays when someone else in the industry has a bad year.
And don’t forget, most traditional carriers are publicly traded. That means they answer to shareholders first, not your client. So when margins tighten, premium increases follow.
This is why agents like you struggle to get clients a fair shake, even when you’re doing everything right.
Is the Bad Advice Intentional?
Most agents aren’t out to screw anyone. The problem is the system they operate in. Other agents are often incentivized to keep clients where they are. This is because carriers reward them for it. Contingency bonuses, commission structures, and volume-based perks make sticking with the status quo more profitable for the agent, even if it’s not best for the client.
Some agents genuinely believe they’re helping by keeping a client with a familiar carrier. Others are simply stuck playing by the carrier’s rules. Either way, your client’s best interest may not always be at the forefront.
We’ve even heard agents ask clients, “Where else are you going to go?” This is a clear sign that they’ve run out of options inside the traditional market.
Some Agents May Not Know About Alternatives Like Captive Insurance
Most agents are good people trying to do right by their clients, but the reality is that many of them have never been trained on or exposed to the captive insurance world. Traditional carriers don’t exactly hand out brochures explaining how to leave the system.
If an agent has spent their entire career working exclusively with guaranteed cost policies, captives might sound like some exotic or unnecessary risk. In truth, they just haven’t been shown how captives work, who they work for, or why they might be the best option for certain clients. Why would a traditional insurer give this training to agents? If your client is profitable to the insurance industry, they don’t want to let them go.
It’s not necessarily the agent’s fault, but it is the client who pays for that gap in knowledge.
Keeping everyone ignorant benefits the carrier.
What Should You Do If You Suspect Your Client is Getting Bad Insurance Advice?
If you suspect your client is getting bad advice or stuck in a structure that’s no longer serving them, it’s time to look at more than traditional options. Whether that means exploring high-deductible plans, retro plans, or stepping into the world of captives, getting curious is the first step.
Will it take work? Yes. Will it feel overwhelming at first? Probably. But doing nothing guarantees you and your client will stay stuck in the same cycle.
If your client’s business is paying significant premiums and managing risk well, it’s worth asking: Is there a better way?
And while you’re at it, make sure you’re talking to the right people about captives. Make sure it’s not just someone selling a tax strategy.
Learn About Real Alternatives for Your Clients
Captive Coalition exists to help independent agents like you rethink insurance strategy. If your client is spending over $250K in premiums and managing their risk well, they may be the perfect fit for a captive. But you won’t know unless you explore it.
Start by learning how captive insurance compares to the traditional market. Read our article on how captive insurance policies differ from traditional ones, and then take the time to look at our Captive Insurance 101 Guide for Independent Agents to learn the basics on captives.
If you want straightforward answers from people who’ve helped hundreds of agents figure this out for their clients, join Captive Coalition for FREE. You’ll get access to tools, resources, webinars, and training designed to help you build better strategies and keep your book of business.
Topics:
