Chapter 8 - Role Of A Broker Flashcards Preview

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Flashcards in Chapter 8 - Role Of A Broker Deck (14)
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1

Principal, agent, third party

Principal - client
Agent - broker
Third party - insurer

2

3 ways relationship of principal and agent may arise

Consent - terms of business agreements

Necessity - entrusted with someone else’s goods

Ratification - agent acts without authority

3

Duties of an agent

Obedience
Personal performance
Due care and skill
Good faith
Accountability

4

Duties of a principal

Remuneration (commission)
Indemnity

5

Undisclosed principal

Agent acting on behalf of principal
The principal may be undisclosed making it seem like they are acting on their own behalf
Agent must have authority to do this
Rarely encountered in LM

6

Authority of an agent

Actual authority :
Express - terms of an agency agreement
Implied

Apparent authority:
3rd party unlikely to be aware of extent of authority
Ostensible - ceo having more authority than someone not on the board

7

Agency may be terminated in 3 ways

Mutual agreement

By one party or the other

Death, bankruptcy, insanity

8

Offering advice

Must apply for authorisation from FCA

9

Appointed representatives

An individual or company appointed by an authorised person and may be acti n for an intermediary

TOBA determines roles and responsibilities

Principal takes responsibility for appointed representatives activities

10

Wholesale and retail brokers

Wholesale - contact with insurer
Retail - direct contact with client

11

Services of intermediaries to clients

Review clients needs
Advise whether risk insurable
Decide best market for risk
Negotiate terms and conditions
Provide advice
Negotiate renewals
Assist with claims

12

Services of intermediary to insurer

Binding risks
Settling claims
Issuing docs
Collecting premium

13

Delegated authority

Ability to grant immediate cover
Ease of operation
Profit sharing provisions

14

Central recording of risk and payment of premium

- broker submits risk info (bureau) to Xchanging Ins-sure Services (XIS)

- Accounting and Settlement now used for vast majority providing mix of scanned docs and electronic docs

- info recorded on XIS system

- UMR given by broker

- system facilitates movement of funds from broker to insurer