How is Insurance Sold?

The term producer is used to refer to the person who sells an insurance policy. There are several different kinds of producers, and not all insurance companies use the same types of producers to sell their products. Insurance companies generally use one of four methods to market their products: direct marketers, independent agents, exclusive agents, or brokers.

• Direct Marketers sell insurance through the mail, by telephone, and over the Internet. Insurance purchased from direct marketers may be less expensive because this method of selling insurance costs less to the insurance company and the insurance company may be able to pass some of the savings on to you.
• Independent Agents often represent many different insurance companies offering different types of insurance policies and premium rates. Since the companies are in competition with one another for business, cost differences may result.
• Exclusive Agents represent a single insurance company and provide premium estimates only for the policies offered by that company.
• Brokers represent the policyholder rather than the insurance company. The broker may work for a fee, which is negotiated with the consumer, work on a commission-only basis, or a combination of the two.

All producers must be licensed by the Division of Insurance. To verify that the company and producer you have selected are licensed to do business in the state, and have not had disciplinary action taken against their license, you may call the division or access this information through the division’s website at www.commerce.state.ak.us under the “Of Interest” section, by clicking the Insurance Company Query link for insurance companies or Search the Producer Database for producers. This information is updated in real time.