Insurance is sold through a variety of different methods by numerous other
insurers. When most people purchase insurance, they go through an insurance
A life insurance agent represents a particular company, or a life insurance
broker represents multiple different companies.
Branch offices of stock and mutual insurance companies are similar to captive
agencies representing one particular insurer in a specific geographical
area. Insurance producers recruited into captive agencies are trained
and supervised by a company or a General Agent.
Up to this point, general agents have functioned strictly as an agent combined
with an insurance agent.
A captive agent is a representative for one insurance company and sells
the products of that company only. The insurance company represents the
captive producer, not the insured. First-year commissions (FYC) for producers
new to the insurance business are usually 50% of the annual life, plus
an allowance for new producers first two or three years. They are also
entitled to yearly renewal commissions of 10% of the original account.
The independent insurance intermediary system is the legacy of the property
and casualty insurer. Independent producers are unaffiliated with a particular
insurance company; therefore, independent producers serve various insurance
Independent agents generally operate independently, or with an agent, or
a managing agent (MGA). The independent producer represents the insured
more than insurance companies. The agent can mean several different entities
and is paid commissions on the business they handle. The business owner
owns the policy coverage expiring at renewal time if it is in their best interest.
An insurance company contracts with an insurance producer, recruits, hires,
trains, and supervises other producers through a contractual agreement
with insurers. However, independent producers hired by an MGA are not
considered the insurance company's employees but relatively independent
1. To offer insurance.
2. To oversee and recruit producers that the MGA receives direct commissions
from. MGA's tend to be responsible for the overhead of their offices.
Generally, producers hired by an MGA will sell products under contractual
agreements, but there are various contracts allowed under the MGA system.
Brokers are independent insurance producers who sell policies through a
variety of companies. A broker acts as the insured's agent in choosing
the appropriate policy from the different companies he/she represents.
Brokers don't have all the power.
Much of insurance marketing takes place through mass marketing campaigns
in the mass media. Direct-Response Marketing is known as a form of online
marketing. This method uses mass media advertising of the policies to
promote them directly to consumers. The policies typically offered are
inexpensive and provide low benefits.
The main types of direct response systems do not utilize insurance agents
to sell insurance. Instead, a form of marketing is used by which consumers
respond by calling an advertised service. For instance, a phone number
would link the customer to a specific insurer's online insurance application.
Direct writing companies pay their salespeople a salary in addition to
paying commissions on the premiums people buy. The representatives do
not choose to move a policy to another company when the policy renews
(or to reinstate it after it has expired). Therefore, the insurance company
owns the business, all of it.
Writers have usually contracted employees of direct writing firms.
This is a new type of financial arrangement where different types of insurance
coverage are offered. To purchase insurance, people can go directly to
the insurance company or the agent's office.
A variety of property and casualty and life & health insurers have
Franchise marketing provides workers with insurance coverage in the event
of large groups of employees. Company contracts are signed with premiums
payable by payroll deduction, and policies vary in the level of coverage,
premiums, and other added costs. Individual underwriting is required because
only a specific number of candidates are accepted.
This company markets insurance through credit cards issued by financial
institutions. The insurance product's purchase can be deducted from
the credit cards or banking accounts held by the financial institutions
marketing the insurance product.
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