Insurance Broker Certification Practice Exam

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Study for the Insurance Broker Certification Exam. Prepare effectively with flashcards and multiple choice questions. Each question comes complete with hints and explanations. Ensure you're ready to excel in your exam!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

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What type of agency system is characterized by representing several companies and earning commissions on personal sales?

Exclusive agency system
General agency system
Independent agency system
Managerial system

The correct answer is: Independent agency system

The independent agency system is characterized by agents who represent multiple insurance companies rather than being tied to a single insurer. This allows them to offer a variety of products to their clients, providing greater flexibility and options tailored to individual needs. Agents earn commissions based on the personal sales they generate, which motivates them to seek out the best policies from different insurers for their clients. This system fosters competition between insurers and can often lead to better rates and coverage for consumers. In contrast, the exclusive agency system involves agents who represent only one insurance company, limiting their ability to offer a diverse range of options. The general agency system typically works with a single insurer but operates on a broader scale, often recruiting sub-agents to sell policies, which differs from the more independent nature of the independent agency model. The managerial system focuses primarily on managing agencies rather than directly selling insurance products.