What Does General Agency System Mean?
A general agency system is a set-up in the insurance market where a person or an entity sells insurance products to agents and brokers in an area. That entity may work for one insurance company or several.
Insuranceopedia Explains General Agency System
The general agency (GA) works for one or more insurance companies. This can be beneficial for these companies because the general agency only gets paid for insurance products that are actually sold. The GA, moreover, can take care of preliminary underwriting activities for the company. It also markets the insurance products in an area.
The agency contacts agents and brokers in the area to sell the insurance products. The agency does not pay them fixed salaries. Rather, they receive commissions on the sale of policies.