California Life-Only & Accident and Health AgentGeneral InsuranceMedium
A small, newly established insurance company primarily sells life insurance policies directly to consumers through its own salaried employees who are not compensated by commission. What type of marketing distribution system is this company utilizing?
- ADirect writer system
- BIndependent agency system
- CExclusive agency system
- DDirect response system
Show answer & explanationAnswer & explanation
Correct answer: A. Direct writer system
A direct writer system employs salaried agents who represent only one insurer and are compensated by salary rather than commission. This aligns with the scenario of a company's own salaried employees selling policies.
Why the other options are wrong
- B. Independent agents represent multiple insurers and are compensated by commission, not salary.
- C. Exclusive agents represent only one insurer but are typically independent contractors compensated by commission, not salaried employees.
- D. Direct response systems sell insurance through mail, telephone, or internet without agents.
Direct Writer System
A marketing distribution system where an insurer's salaried employees sell insurance policies directly to consumers, representing only that one insurer.
- Agents are employees, not independent contractors.
- Compensation is typically salary-based.
- Agents represent only one insurance company.
Memory trick: Many paths to a policy, but only one direct route for a salaried writer.