An agent who represents only one insurer and is required to place business exclusively with that company is best described as a:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A captive or exclusive agent represents a single insurer and is contractually limited to placing business with that company. Independent agents represent multiple insurers and can shop coverage among the companies they contract with. Direct response distribution sells without a field agent at all, through mail, telephone, or the internet. In California life and health insurance, transactions are conducted by agents rather than brokers, and the choice between captive and independent structures affects the range of products offered to the customer and the producer's role in the sale.
Why the other options are wrong
- B) An independent agent represents multiple insurers and can place business with any of them, which is the opposite of a captive relationship.
- C) A direct response representative is a salaried employee taking orders by phone or mail for a direct response insurer, not an exclusive field agent.
- D) In life and health insurance the producer is an agent representing the insurer; a broker representing the customer is primarily a property-casualty model.
Memory hook
Captive = one company in the bag. Independent = a shelf of companies to choose from.