Chapter 7 Flashcards
(25 cards)
Insurance Distribution and insurance Intermediaries
Independent Agency
Brokerage System
Exclusive Agency System
Direct Writers
Insurance intermediaries
Anyone who is going to be negotiating insurance or reinsurance. Anyone who negotiates insurance for a third party. Paid on a commission basis.
Brokerage Systems
An independent business system where we have multiple brokers who sell insurance.
Exclusive agency system
A licensed agency that only sells for one company.
Direct Writers
When people work at the insurance company and sell the insurance.
Eg MPI SCR
Broker
An independent business person who may place insurance with several insurance companies.
Agent
Represents one company only
Mandate
A mandate is a contract t which the mandatory commits a lawful business to the management of another called the mandatory. Who by accepting the contract is obligated to perform the contract.
Principal Agent Relationship
The term used in common law provinces.
The relationship of the agent bringing in new business to the insurance company.
2 types of Contract authorities
Implied
Express
Express - more common
One in which the terms of the arrangement have been specifically stated and agreed to by the parties either orally or in writing.
Implied (wink wink, nudge nudge)
One in which the parties have acted in such a way that it is understood that a principal agent relationship exists even though no expressed statement may have been made by either.
Licensing and regulation
Must have!
Government regulations
Self regulation (RIBO)
RIBO
Register insurance brokers Ontario
Law of agency
Applies when an agent is authorized to do something on behalf of a principal. The principal is the person or entity for whom the agent or broker acts.
Responsibility of the broker
Follow binding authority - instructions on the type of business may write. Could be up to a certain amount of money.
Collect the premiums and hold them in the trust.
Remit premiums within a certain time frame.
Advise of business written or submit applications promptly.
Advise insured promptly if all claims
Role of Intermediaries
Identify the insurance needs of the client. - Ask questions, age, address, who’s driving, income.
Match those needs to product available
Finalize the contract.
Broker needs to have communication skills.
Listen to what is being said
Interpreting how it is being said
Process non verbal skills
Question clients
Confirm the needs
Selling
Referrals
Digital or online marketing
Advertising
Cold calling
Tracking expiry dates
Upselling and cross selling
Regulations of Intermediaries
Qualifications
Licensing
Operating Requirements
Renewal of licence
Premiums and the broker
Operating Account - their operating money goes into
Trust Account - money for the insurance company goes in there.
Commission
The amount of money the insurance company will pay to bring in the client. $ or %
Contingent commission
Commission that is based on how well the business is doing. “Book of business”
An incentive