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American Agency System

American Agency System

What Is the American Agency System?

The American agency system is a method of selling insurance policies. The system includes independent insurance agents who find the best insurance policies for their customers and receive a commission for every policy they sell. The American agency system utilizes independent agents who sell policies from a wide assortment of companies instead of captive agents who can sell insurance products offered by a single company.

How the American Agency System Works

As of recently, consumers were simply able to get homeowners, auto, or life insurance by contacting an agent in their area or a specific insurance company. This elaborate calling different insurance companies and contrasting quotes with get the best conceivable price and coverage. So on the off chance that you went to your nearby Prudential office, you'd walk away with a Prudential policy.

This system actually remains today. In fact, numerous consumers actually purchase insurance policies as such. In any case, the insurance industry has gone through major developments on account of the internet and direct-deals insurers (who are armed with national advertising [budgets](/spending plan), enormous online operations, and armies of online agents), bringing about what's called the American agency system.

There are scores of independent agents who work in the American agency system. This permits consumers to interface with a single professional instead of various agents. This one point of contact eliminates the mystery from picking the right policy. They accomplish basically everything of exploring various policies and companies for the customer's benefit. Eventually, it might assist a customer with getting a better deal.

Professionals who work inside the American agency system are called independent agents.

Special Considerations

GEICO is perhaps of the most well known name operating in the insurance industry in the United States today. Be that as it may, in spite of what the vast majority accept, it isn't just one company. In fact, there are numerous operating companies included, so on the off chance that you ask for a quote, you might get it from at least one of them.

Owned by Berkshire Hathaway (a monstrous holding company made popular by Warren Buffett), GEICO guarantees in excess of 30 million vehicles in the U.S. GEICO additionally sends customers searching for homeowners and different types of insurance to companies with which it has agreements in each state. For instance, in the event that you need homeowners insurance in New Jersey, GEICO might allude you to Stillwater Insurance Group.

The Friendly Society was the main insurance company in the United States. It was laid out in 1735 in Charleston, South Carolina, and went under five years after the fact.

American Agency System versus Captive Agents

As verified over, the American agency system is distinct from traditional channels, which include captive agents who work for just one insurance company. This means that when you go to see a captive agent about a policy, you'll just get a quote for coverage from that one company. Accordingly, they are just knowledgeable in the products, fees, and services that their insurance company gives.

Since they comprehend the intricate details of the company, captive agents are better prepared to meet the quite certain necessities of new and existing clients. However, one of the ruins of utilizing captive agents is that they frequently have amounts to fill, and that means they might try to sell products to consumers that they may not be guaranteed to require.


  • The American agency system is an insurance system comprised of independent insurance agents.
  • Not at all like independent agents, captive agents work for a single insurance company.
  • It permits agents to find and sell policies from a large pool of companies.
  • The American agency system additionally benefits purchasers by finding the best coverage for their financial and lifestyle needs.
  • The system permits agents to act independently of insurance companies to track down policies at the right price.