Question 81

An individual whose contract with an insurer allows the individual to represent ONLY one insurance company is a captive agent.

A captive agent is defined as a representative who has an exclusive contract with a single insurance company, allowing them to sell only that company’s products. This exclusivity differentiates them from other types of agents and brokers.

A) A captive agent

This option is correct as it directly describes an individual who is contracted to represent only one insurance company. Captive agents typically receive training and support from the insurer and are limited to selling that company's products.

B) An independent agent

An independent agent operates differently as they represent multiple insurance companies. They have the freedom to offer a variety of products from different insurers, which allows for a more diverse range of options for their clients. This option does not meet the criteria of representing only one insurer.

C) A broker

Brokers also represent clients rather than insurance companies and can work with multiple insurers to find the best coverage options for their clients. This role fundamentally differs from that of a captive agent, who is tied to only one insurer.

D) A free agent

The term "free agent" is not a standard term used in the insurance industry to describe a type of agent. It may imply flexibility, but it does not accurately describe an agent who is contracted to represent only one insurance company.

Conclusion

A captive agent is the only correct answer as it specifically refers to an individual who can only represent one insurance company, aligning perfectly with the question's requirements. All other options describe roles that involve representation of multiple insurers or lack a defined meaning in this context, making them incorrect.