1.7.4 Agency Systems
Florida statutes define an insurance agency as:
"...a business location which an individual, firm, partnership, corporation, association, or other entity engages in any activity or employs individuals to engage in any activity which by law may be performed only by a licensed insurance agent."
This means that even an agent who is independently operating out of his/her home must obtain an agency license for that location. However, if the agent does not hold the home out as being a business location at which consumers can purchase or inquire about insurance products, the home does not have to be licensed as an insurance agency. (This does not apply to Florida resident property and casualty agents.)
There are three types of agency systems sustaining insurance sales through agents and brokers.
- Career Agency System (GA)
- Personal Producing General Agency System (PPGA)
- Independent Agency System
Under the Career Agency System, the focus is on building sales staffs, and agents are treated as employees. Just like any other industry, agents are recruited and trained. Agents are supervised by a principal in the company who has a vested interest in the business written.
On the other hand, in the Personal Producing General Agency System, the agent supplies his own working environment. Agents hired by a PPGA are considered employees of the PPGA, not the insurance company, and are supervised by regional directors.
In the Independent Agency System (aka the American Agency System), agents represent several insurers through signed contracts and are paid on a commission or fee basis, not through salary.
- What constitutes an insurance agency?
