General Insurance PrinciplesQuestion 195 of 474
Producers who are salaried or commissioned employees of one insurer, and who do not own the renewal rights to their accounts, belong to the:
a.independent agency system, where the agency owns its expirations
b.direct writer system, where the insurer employs the sales force
c.reciprocal system, where subscribers trade contracts directly
d.surplus lines system, where a broker places declined business
Explanation
A direct writer employs its producers, and the accounts and their expirations belong to the insurer. An independent agency represents several insurers and owns its expirations, so it can move a client's business to another carrier at renewal. An exclusive or captive agency sits between the two: it represents one insurer but its producers are not employees.
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