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'''Direct writer''', also called an '''exclusive [[insurance]] agent''' or a '''captive agent''', is a type of insurance agent who represents only one particular insurance [[company]]<ref>Beh H., Willis A. (2008) ''[http://insurancejournal.org/wp-content/uploads/2011/07/51.pdf, Insurance intermediaries]'', "Connecticut Insurance Law Journal", Vol. 15:2, p.574-579</ref>. | |||
In direct writing, no insurance intermediaries are utilized - the insurers focus on [[Mass Merchandising|mass merchandising]] of their own insurance products. They employ direct writers who [[work]] as the insurer's sales force and represent the company. | |||
==The role of the direct writers== | |||
The main role of the direct writer is to sell all types of insurance policies, for example: | |||
==The role of the direct writers== | |||
The main role of the direct writer is to sell all types of insurance policies, for example: | |||
* liability insurance, | * liability insurance, | ||
* property insurance, | * property insurance, | ||
* health insurance. | * health insurance. | ||
Exclusive agents are able to offer their customers the best policy at best [[price]], but only within the | Exclusive agents are able to offer their customers the best policy at best [[price]], but only within the range of insurance services offered by one particular company. | ||
==The compensation of direct writers== | ==The compensation of direct writers== | ||
Direct writers, as the employees of an insurance company, are usually compensated with the salary basis plus a commission or bonus for [[production]]<ref>Outreville J.F. (1998), | Direct writers, as the employees of an insurance company, are usually compensated with the salary basis plus a commission or bonus for [[production]]<ref>Outreville J.F. (1998), ''[https://www.researchgate.net/publication/302305571_Organization_of_Insurance_Markets, Theory and Practice of Insurance]'', Springer Science+Business Media, New York, p.10-11</ref>. | ||
==Direct writers vs. independent insurance agents == | ==Direct writers vs. independent insurance agents== | ||
Direct writers offer insurance products of '''only one insurance agency''', therefore they are considered to be less convenient for the potential policyholders than independent agents. | Direct writers offer insurance products of '''only one insurance agency''', therefore they are considered to be less convenient for the potential policyholders than independent agents. | ||
Making use of direct writers' services can be inconvenient because of the following reasons: | Making use of direct writers' services can be inconvenient because of the following reasons: | ||
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Nowadays, '''freelancers''' are the most popular form of insurance agents. They want to be as effective as possible, therefore they offer a wide variety of insurance products and they cooperate with multiple insurance companies. | Nowadays, '''freelancers''' are the most popular form of insurance agents. They want to be as effective as possible, therefore they offer a wide variety of insurance products and they cooperate with multiple insurance companies. | ||
However, it has been proven that independent agents are not always providing the potential policyholders with overall better [[service]] [[quality]] than direct writers. Although independent insurance agents tend to be more active in claims settlement than exclusive agents, there are different opinions on the | However, it has been proven that independent agents are not always providing the potential policyholders with overall better [[service]] [[quality]] than direct writers. Although independent insurance agents tend to be more active in claims settlement than exclusive agents, there are different opinions on the quality of the services offered by independent agents in terms of [[risk]] analysis and placing insurance applications<ref>Eckhardt M.,Räthke-Döppner S. (2008), ''[https://mpra.ub.uni-muenchen.de/10703/1/MPRA_paper_10703.pdf, The Quality of Insurance Intermediary Services - Empirical Evidence for Germany]'', "Andrássy Working Papers", Vol. XXV, p.11</ref>. | ||
==Examples of Direct writer== | |||
* '''Allstate ''': AllState is an American insurance company that offers a variety of insurance products including auto, home, and life insurance. Allstate agents are exclusive to Allstate, meaning that they can only sell Allstate policies and cannot work with any other insurance provider. | |||
* '''State Farm ''': State Farm is one of the largest insurance companies in the United States. They offer a variety of products, including auto, home, and life insurance. State Farm agents are exclusive to State Farm, and they can only sell State Farm policies. | |||
* '''Farmers Insurance ''': Farmers Insurance is a large insurance company that offers a variety of insurance products, including auto, home, and life insurance. Farmers Insurance agents are exclusive to Farmers Insurance, meaning that they can only sell Farmers Insurance policies and cannot work with any other insurance provider. | |||
* '''USAA Insurance ''': USAA Insurance is an insurance company that offers a variety of insurance products, including auto, home, and life insurance. USAA Insurance agents are exclusive to USAA Insurance, meaning that they can only sell USAA Insurance policies and cannot work with any other insurance provider. | |||
==Advantages of Direct writer== | |||
A direct writer, also known as an exclusive insurance agent or a captive agent, is a type of insurance agent who represents only one particular insurance company. One of the benefits of using a direct writer is that they may be able to offer discounts or special rates that other agents cannot. Additionally, direct writers can provide more personalized service and advice since they are familiar with the individual [[needs]] of the company they represent. Furthermore, the direct writer is able to provide more efficient customer service since they deal exclusively with a single company. Another benefit of using a direct writer is that they can provide insight about the company’s products and services, which can help a customer make an informed decision. Finally, since the agent is only working with one company, they may be able to provide more comprehensive coverage than an independent agent. *Overall, direct writers can offer valuable discounts, personal service, efficient customer service, insight into the company’s products, and comprehensive coverage. | |||
==Limitations of Direct writer== | |||
A direct writer has several limitations to the services they can provide. These limitations include: | |||
* '''Limited access to the insurance market''': A direct writer is limited to only the products of the single insurance carrier they are contracted with. This means they are unable to shop around for the best deals and find the most competitive rates for their customers. | |||
* '''Limited options for customization''': Direct writers are unable to customize policies to fit the specific needs of their customers. | |||
* '''Less personal service''': Direct writers are often less knowledgeable about the products and services they are selling and may be less inclined to provide personalized customer service. | |||
* '''Higher prices''': Insurance companies who employ direct writers often charge higher premiums than other insurance carriers due to the lack of [[competition]]. | |||
==Other approaches related to Direct writer== | |||
A Direct Writer is a type of insurance agent who exclusively represents one particular insurance company. Other approaches related to Direct writers are: | |||
* '''Independent Agents''': An independent agent is a type of insurance agent who represents multiple insurance companies. This allows them to shop around for the best rates and coverage for their clients. | |||
* '''Brokers''': A broker is a type of insurance agent who works for the insured, not the insurance company. They act as an intermediary between the insured and the insurance company to get the best terms for the insured. | |||
* '''Online Insurance Agents''': An online insurance agent is a type of insurance agent who works exclusively online. They provide their services over the [[internet]] and can offer competitive rates from various insurance companies. | |||
In summary, while Direct Writers only represent one particular insurance company, there are many other approaches to purchasing insurance, such as Independent Agents, Brokers, and Online Insurance Agents. Each of these approaches have their own advantages and disadvantages, allowing customers to make an informed decision when choosing their insurance coverage. | |||
==Footnotes== | ==Footnotes== | ||
<references /> | <references /> | ||
{{infobox5|list1={{i5link|a=[[Captive agent]]}} — {{i5link|a=[[Local agent]]}} — {{i5link|a=[[Insurance intermediary]]}} — {{i5link|a=[[Placement fee]]}} — {{i5link|a=[[Coupon book]]}} — {{i5link|a=[[Export management company]]}} — {{i5link|a=[[Price bundling]]}} — {{i5link|a=[[Commercial mortgage broker]]}} — {{i5link|a=[[Exclusive distribution]]}} }} | |||
==References== | ==References== | ||
* Beh H., Willis A. (2008) ''[http://insurancejournal.org/wp-content/uploads/2011/07/51.pdf, | * Beh H., Willis A. (2008) ''[http://insurancejournal.org/wp-content/uploads/2011/07/51.pdf, Insurance intermediaries]'', "Connecticut Insurance Law Journal", Vol. 15:2 | ||
* Dionne G., Harrington S. (2017), ''[https://www.researchgate.net/publication/318001226_Insurance_and_Insurance_Markets, Insurance and Insurance markets]'', "SSRN Electronic Journal" | * Dionne G., Harrington S. (2017), ''[https://www.researchgate.net/publication/318001226_Insurance_and_Insurance_Markets, Insurance and Insurance markets]'', "SSRN Electronic Journal" | ||
* Eckhardt M.,Räthke-Döppner S. (2008), ''[https://mpra.ub.uni-muenchen.de/10703/1/MPRA_paper_10703.pdf, | * Eckhardt M.,Räthke-Döppner S. (2008), ''[https://mpra.ub.uni-muenchen.de/10703/1/MPRA_paper_10703.pdf, The Quality of Insurance Intermediary Services - Empirical Evidence for Germany]'', "Andrássy Working Papers", Vol. XXV | ||
* Latorre M.A. (2015) ''[https://www.researchgate.net/publication/282909441_Shedding_the_Light_on_Insurance_Brokers'_Remuneration_the_Role_of_the_Fees, Shedding the Light on Insurance Brokers’ Remuneration: the Role of the Fees]'', "Opción", Vol. 2 | * Latorre M.A. (2015) ''[https://www.researchgate.net/publication/282909441_Shedding_the_Light_on_Insurance_Brokers'_Remuneration_the_Role_of_the_Fees, Shedding the Light on Insurance Brokers’ Remuneration: the Role of the Fees]'', "Opción", Vol. 2 | ||
* Outreville J.F. (1998), | * Outreville J.F. (1998), ''[https://www.researchgate.net/publication/302305571_Organization_of_Insurance_Markets, Theory and Practice of Insurance]'', Springer Science+Business Media, New York, p.199-220 | ||
* Sonnentag, S., & Kleine, B. M. (2000). ''[http://kops.uni-konstanz.de/bitstream/handle/123456789/10513/Deliberate_practice_at_work.pdf?sequence=1&isAllowed=y Deliberate practice at work: A study with insurance agents]''. Journal of Occupational and Organizational Psychology, 73(1), 87-102. | * Sonnentag, S., & Kleine, B. M. (2000). ''[http://kops.uni-konstanz.de/bitstream/handle/123456789/10513/Deliberate_practice_at_work.pdf?sequence=1&isAllowed=y Deliberate practice at work: A study with insurance agents]''. Journal of Occupational and Organizational Psychology, 73(1), 87-102. | ||
[[Category:Insurance]] | [[Category:Insurance]] | ||
{{a|Marta Łazarz}} | {{a|Marta Łazarz}} | ||
Latest revision as of 21:15, 17 November 2023
Direct writer, also called an exclusive insurance agent or a captive agent, is a type of insurance agent who represents only one particular insurance company[1]. In direct writing, no insurance intermediaries are utilized - the insurers focus on mass merchandising of their own insurance products. They employ direct writers who work as the insurer's sales force and represent the company.
The role of the direct writers
The main role of the direct writer is to sell all types of insurance policies, for example:
- liability insurance,
- property insurance,
- health insurance.
Exclusive agents are able to offer their customers the best policy at best price, but only within the range of insurance services offered by one particular company.
The compensation of direct writers
Direct writers, as the employees of an insurance company, are usually compensated with the salary basis plus a commission or bonus for production[2].
Direct writers vs. independent insurance agents
Direct writers offer insurance products of only one insurance agency, therefore they are considered to be less convenient for the potential policyholders than independent agents. Making use of direct writers' services can be inconvenient because of the following reasons:
- there is no possibility for the potential policyholder to compare several options offered by different insurance companies and to choose the best one,
- the customer has to go from one company to another in order to compare insurance products available on the market, which makes the process of buying the insurance more time-consuming.
Therefore, it is more convenient to cooperate with independent agents or insurance brokers who represent multiple insurance companies.
Direct writer as a business entity is usually considered to be less effective than the agent who offers insurance products of multiple agencies. Exclusive insurance agents were more popular in the past. In 1990s insurance business began to change: the majority of the companies laid off their agents due to high costs of keeping such a network. Nowadays, freelancers are the most popular form of insurance agents. They want to be as effective as possible, therefore they offer a wide variety of insurance products and they cooperate with multiple insurance companies.
However, it has been proven that independent agents are not always providing the potential policyholders with overall better service quality than direct writers. Although independent insurance agents tend to be more active in claims settlement than exclusive agents, there are different opinions on the quality of the services offered by independent agents in terms of risk analysis and placing insurance applications[3].
Examples of Direct writer
- Allstate : AllState is an American insurance company that offers a variety of insurance products including auto, home, and life insurance. Allstate agents are exclusive to Allstate, meaning that they can only sell Allstate policies and cannot work with any other insurance provider.
- State Farm : State Farm is one of the largest insurance companies in the United States. They offer a variety of products, including auto, home, and life insurance. State Farm agents are exclusive to State Farm, and they can only sell State Farm policies.
- Farmers Insurance : Farmers Insurance is a large insurance company that offers a variety of insurance products, including auto, home, and life insurance. Farmers Insurance agents are exclusive to Farmers Insurance, meaning that they can only sell Farmers Insurance policies and cannot work with any other insurance provider.
- USAA Insurance : USAA Insurance is an insurance company that offers a variety of insurance products, including auto, home, and life insurance. USAA Insurance agents are exclusive to USAA Insurance, meaning that they can only sell USAA Insurance policies and cannot work with any other insurance provider.
Advantages of Direct writer
A direct writer, also known as an exclusive insurance agent or a captive agent, is a type of insurance agent who represents only one particular insurance company. One of the benefits of using a direct writer is that they may be able to offer discounts or special rates that other agents cannot. Additionally, direct writers can provide more personalized service and advice since they are familiar with the individual needs of the company they represent. Furthermore, the direct writer is able to provide more efficient customer service since they deal exclusively with a single company. Another benefit of using a direct writer is that they can provide insight about the company’s products and services, which can help a customer make an informed decision. Finally, since the agent is only working with one company, they may be able to provide more comprehensive coverage than an independent agent. *Overall, direct writers can offer valuable discounts, personal service, efficient customer service, insight into the company’s products, and comprehensive coverage.
Limitations of Direct writer
A direct writer has several limitations to the services they can provide. These limitations include:
- Limited access to the insurance market: A direct writer is limited to only the products of the single insurance carrier they are contracted with. This means they are unable to shop around for the best deals and find the most competitive rates for their customers.
- Limited options for customization: Direct writers are unable to customize policies to fit the specific needs of their customers.
- Less personal service: Direct writers are often less knowledgeable about the products and services they are selling and may be less inclined to provide personalized customer service.
- Higher prices: Insurance companies who employ direct writers often charge higher premiums than other insurance carriers due to the lack of competition.
A Direct Writer is a type of insurance agent who exclusively represents one particular insurance company. Other approaches related to Direct writers are:
- Independent Agents: An independent agent is a type of insurance agent who represents multiple insurance companies. This allows them to shop around for the best rates and coverage for their clients.
- Brokers: A broker is a type of insurance agent who works for the insured, not the insurance company. They act as an intermediary between the insured and the insurance company to get the best terms for the insured.
- Online Insurance Agents: An online insurance agent is a type of insurance agent who works exclusively online. They provide their services over the internet and can offer competitive rates from various insurance companies.
In summary, while Direct Writers only represent one particular insurance company, there are many other approaches to purchasing insurance, such as Independent Agents, Brokers, and Online Insurance Agents. Each of these approaches have their own advantages and disadvantages, allowing customers to make an informed decision when choosing their insurance coverage.
Footnotes
- ↑ Beh H., Willis A. (2008) Insurance intermediaries, "Connecticut Insurance Law Journal", Vol. 15:2, p.574-579
- ↑ Outreville J.F. (1998), Theory and Practice of Insurance, Springer Science+Business Media, New York, p.10-11
- ↑ Eckhardt M.,Räthke-Döppner S. (2008), The Quality of Insurance Intermediary Services - Empirical Evidence for Germany, "Andrássy Working Papers", Vol. XXV, p.11
| Direct writer — recommended articles |
| Captive agent — Local agent — Insurance intermediary — Placement fee — Coupon book — Export management company — Price bundling — Commercial mortgage broker — Exclusive distribution |
References
- Beh H., Willis A. (2008) Insurance intermediaries, "Connecticut Insurance Law Journal", Vol. 15:2
- Dionne G., Harrington S. (2017), Insurance and Insurance markets, "SSRN Electronic Journal"
- Eckhardt M.,Räthke-Döppner S. (2008), The Quality of Insurance Intermediary Services - Empirical Evidence for Germany, "Andrássy Working Papers", Vol. XXV
- Latorre M.A. (2015) Shedding the Light on Insurance Brokers’ Remuneration: the Role of the Fees, "Opción", Vol. 2
- Outreville J.F. (1998), Theory and Practice of Insurance, Springer Science+Business Media, New York, p.199-220
- Sonnentag, S., & Kleine, B. M. (2000). Deliberate practice at work: A study with insurance agents. Journal of Occupational and Organizational Psychology, 73(1), 87-102.
Author: Marta Łazarz
