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| Insurance
agents: independent agents vs. paid employees | | Insurers
deliver their insurance products to policyowners primarily
through independent or exclusive agents. Historically,
almost all
insurance agents were independent business people paid
on commission.
More recently, many insurance companies have adopted
a system where the
agent is a paid employee of the firm. These agents
are referred to as
exclusive agents. Economists studying the differences
between these two
distribution systems have long argued that the independent
agency system
is a less efficient method of getting the product to
the customer as
measured by the ratio of expenses incurred to premiums
written and other
statistics. But recent studies suggest the reason for
the higher
expenses with independent agents is that they offer
higher quality to
policyowners through more personalized service, more
advice on policy
limits, more help when a claim is filed with the company,
etc. So one
thing you could consider is how much guidance and service you want.More
FAQ... |
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