IBABC Fundamentals of Insurance Practice Exam 2025 – The Comprehensive All-in-One Guide to Exam Success!

Question: 1 / 400

Which statement does NOT apply to the distribution system using independent brokers?

Independent brokers are unpaid salespeople

Independent brokers negotiate on behalf of clients

Independent brokers are employees of the insurance companies they represent

The statement that does not apply to the distribution system using independent brokers is that independent brokers are employees of the insurance companies they represent. This is correct because independent brokers operate independently and are not employed by any single insurance company. Instead, they represent multiple insurers and have the flexibility to offer a variety of policies that best meet their clients' needs.

Independent brokers are typically compensated through commissions from the insurance companies when they sell policies, rather than being salaried employees of those companies. This independence allows them to provide a wider range of options for their clients and to negotiate on their behalf effectively. In contrast, if they were employees of a specific insurance company, their ability to offer diverse choices would be limited to that company’s products, which would not align with the independent broker model.

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Independent brokers may offer policies from multiple insurers

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