Property and Casualty Insurance Practice Exam

What characterizes a direct writer system in insurance?

1. The company employs agents who are paid directly through a salary

2. The agents operate independently and sell for multiple companies

3. Sales are conducted through direct mail or phone without agents

4. Agents receive training and certification from multiple insurers

The correct answer is: Sales are conducted through direct mail or phone without agents

A direct writer system in insurance is characterized by the fact that sales are conducted through direct channels such as direct mail or phone. This model eliminates the need for independent agents who sell for multiple companies. Instead, the insurance provider interacts directly with consumers, which can lead to reduced costs associated with agent commissions and potentially lower premiums for policyholders. In this system, the insurer often handles all aspects of the sales process, from marketing to customer service, streamlining operations and enhancing the customer experience. This approach allows the insurance company to maintain greater control over its distribution channels and customer relationships, making it easier to implement uniform policies and deliver consistent messaging.