South Dakota Crop Insurance Practice Exam

What defines a captive agent?

1. Represents several insurance companies

2. Direct writers who own expirations

3. Salaried representative for one insurance company

4. Independent contractor for various insurers

The correct answer is: Salaried representative for one insurance company

A captive agent is defined as a salaried representative for one insurance company. This means that the agent is employed by a single insurance company and can only market and sell that company's insurance products. Captive agents typically have in-depth knowledge of the insurance company's offerings and cultivate long-term relationships with clients, focusing on understanding their needs and providing tailored solutions within the confines of the company's offerings. Captive agents are distinct from those who represent multiple insurance companies, often referred to as independent agents or brokers, who have the freedom to offer a range of products from different insurers. Independent contractors often work on a commission basis, in contrast to captive agents who may receive a salary along with commissions, thus having a different business model and relationship with clients. This employment framework ensures that captive agents are dedicated to promoting and supporting one organization’s interests, which can lead to a more cohesive marketing strategy and customer service experience focused solely on that company’s policies.