Chapter 8 Role of a broker Flashcards
Who is a broker usually an agent of?
The policyholder/insured
Identify three ways agency can be created
By consent/agreement (TOBA)
By necessity
By ratification
What is the difference between express and implied authority?
Express authority is expressly given usually specified in a terms of business agreement (TOBA)
Implied authority is assumed given the nature of the relationship
As an agent what duties does a broker owe to the insured
Advice on coverage
Advice on claim
In what circumstances may a broker act as an agent of an insurer
Authorised by insurer to receive and handle proposal forms
Surveys property on insurer’s behalf
Collects premiums on insurers behalf
Authorised to pay claims by insurer
Identify five duties owed by an agent to its principal
Obedience Care and skill Personal performance Good faith Accountability
Identify two duties owed by the principal to the agent
Remuneration
Indemnity
Indemnity agaist losses incurred on the principal’s behalf
If it appears to a third party that an agent has the authority of their principal (apparent authority) will the principal be bound by any agreement the agent makes on their behalf with the third party
Yes
Identify three ways an agency agreement can be terminated
By mutual agreement
Terminated by principal or agent
Performance
By death, bankruptcy, insanity
What is an intermediary?
Known as an agent authorized by one party the ‘principal’ to bring that principal into a contractual relationship with another, termed the third party.
Who are Lloyd’s insurance brokers? and who are the regulated by?
These are brokers that have proved their knowledge and expertise to the council of Lloyd’s they are regulated by Lloyd’s and the FCA.
What is apparent authority
Third party believes agent has authority of principal when they don’t - principal can be bound by a gent if they have apparent authority
What is an appointed representative?
An individual or a company that is appointed by an authorised person under the terms of a contract. An AR may be acting for an intermediary that is itself directly authorised by the regulator.
A broker placing business on behalf of a retail or producing broker is known as ?
A wholesale broker
What actions can FCA take against intermediaries who do not follow rules?
withdrawing that firm’s authorisation;
* disciplining both individuals and firms;
* imposing penalties;
* applying to the court for injunctions (a court order requiring certain action to be stopped); and
* prosecuting the firm.
