Georgia Property & Casualty Practice Exam

What do a direct writer and an exclusive agent have in common?

1. They both only represent one insurer.

2. Both are considered independent contractors.

3. Neither is required to obtain a producer license.

4. Neither is considered a captive agent.

The correct answer is: They both only represent one insurer.

A direct writer and an exclusive agent share the characteristic of representing only one insurer. This structure means that both types of representatives sell products exclusively from the company they are associated with. In the case of a direct writer, the company employs agents directly and ensures they are focused solely on promoting and selling that insurer’s products. On the other hand, an exclusive agent operates similarly by representing one insurance company but is typically an independent contractor who maintains a contractual agreement with that insurer. This exclusivity allows both direct writers and exclusive agents to specialize in the products and services of a single insurer, building in-depth knowledge and expertise about that company’s offerings which can enhance customer service and sales effectiveness. The other options describe principles that do not apply universally to both direct writers and exclusive agents. For example, while both types may operate under specific contractual agreements, not all exclusive agents are considered independent contractors, nor does the requirement of a producer license apply universally. Additionally, both direct writers and exclusive agents are indeed captive agents, as they are not free to sell policies from multiple insurers.