1.5 Insurer Management and Distribution

Question 1

Exclusive or Captive Agency System

Answer 1

Deals with the insured through an exclusive or captive agent.
• Agent represents solely one company or group of companies having common ownership.
• Insurer retains ownership rights to the business written by the agent.
• The agent is an employee or a commissioned independent contractor.
• Insurer may or may not provide office and agency support services.

Question 2

Direct Writing System

Answer 2

Producer or Agent is an employee of the insurer.
• Insurer owns the accounts.
• The agent may be paid a salary, salary plus bonus, or commission.

Question 3

Independent Agency

Answer 3

An agent or agency that enters into agency agreements with more than one insurer. It may represent an unlimited number of insurers.
• Agency retains ownership of the business written.
• An independent contractor that is paid a commission and covers the cost of agency operations.

Question 4

Career Agency System

Answer 4

Agents are recruited, trained and supervised by either a managing employee or General Agent who is contracted with the insurance company.

Question 5

Personal Producing General Agent

Answer 5

Does not recruit career agents.

• Sells insurance for carriers it is contracted with and maintains its own office and staff.

Question 6

Direct Mail or Direct Response Company

Answer 6

Sells insurance policies directly to the public with licensed employees or contractors.
• A marketing system utilizing direct mail, newspapers, magazines, radio, television, internet, web sites, call centers and vending machines.

Question 7

Mass Marketing

Answer 7

• Mass marketing is used to target a specific type of insurance to a large group of individuals, such as the American Association of Retired People (AARP).
• Insurer reduces marketing and underwriting expenses.