If an insurance agency contracts to sell only the products of one insurance company, what system are they utilizing?

The exclusive agency system is characterized by an arrangement where an insurance agency commits to selling only the products of a single insurance company. This means that the agents do not have the flexibility to offer products from multiple insurers, focusing entirely on the offerings of the one company they represent. This type of arrangement allows the insurance company to maintain greater control over its brand and product representation while providing agents with specific training and resources related to those products.

In this system, agents typically receive commissions and may also have the opportunity for bonuses tied to performance metrics specific to the insurance company. This model can benefit clients by ensuring that the agent has deep knowledge of the products and strategies unique to the single insurer.

Other types of agency systems, such as independent or general agency systems, involve agents representing multiple insurance companies, thereby providing clients with a broader range of options and coverage choices. The direct writing system bypasses agents altogether, selling insurance directly to consumers through the insurance company itself.