Texas General Lines — Property and CasualtyGeneral InsuranceMedium
A new insurance company is designing its marketing and distribution strategy. They decide to hire their own employees as agents, who will only sell policies for this one company. What type of marketing distribution system are they utilizing?
- AIndependent Agency System
- BExclusive Agency System
- CDirect Response System
- DBrokerage System
Show answer & explanationAnswer & explanation
Correct answer: B. Exclusive Agency System
An exclusive agency system employs agents who represent only one insurer and are typically employees or independent contractors compensated by that single insurer.
Why the other options are wrong
- A. Independent agents represent multiple insurance companies.
- C. Direct response systems sell insurance directly to the public via mail, internet, or phone.
- D. Brokerage systems involve brokers who represent the insured, not the insurer, and place business with various companies.
Exclusive Agency System
A marketing and distribution system where agents represent only one insurance company and are compensated by that single insurer.
- Agents are dedicated to one insurer.
- Insurer often provides training and support.
- Can be employees or independent contractors.
Memory trick: Directly EXCLUSIVE INDEPENDENT BROKERS sell.