American Agency System

DEFINITION of 'American Agency System'

A method of selling insurance policies in which independent insurance agents locate the best insurance policies for their customers and receive a commission for each insurance policy sold. The American agency system uses independent agents who can sell policies from a wide variety of companies, unlike captive agents, who can only sell one company's insurance products.

BREAKING DOWN 'American Agency System'

While many insurance customers these days are accustomed to calling different insurance companies and comparing quotes online, an independent agent, working in the manner known as the American agency system, does the work of researching different policies and companies on the customer's behalf. This may help a customer obtain a better deal.