Duties of an Insurance Agent to the Principal

Question 1

What are the five “Duties of an Insurance Agent to the Principal”?

Answer 1

OBEY THE PRINCIPAL’S INSTRUCTIONS

EXERCISE PROPER CARE AND SKILL

PERFORM DUTIES PERSONALLY

ACT IN GOOD FAITH TOWARDS THE PRINCIPAL

ACCOUNT FOR MONIES RECEIVED ON BEHALF OF THE PRINCIPAL

Question 2

Define “Obey the principal’s instructions”.

Answer 2

An agent must carry out all lawful instructions, he may follow market usage where such practice is clear.

Question 3

Define “Exercise proper care and skill”.

Answer 3

An agent owes a duty to his principal to exercise reasonable care and skill.

Question 4

Define “Perform duties personally”.

Answer 4

An agent may not delegate duties to a sub-agent and must perform his duties in person,

except for the delegation of routine clerical and administrative tasks to employees.

Question 5

Define “Act in good faith towards the principal”.

Answer 5

An agent must act in perfect good faith when dealing with the principal, generally act in the principal’s best interest.

Question 6

Define “Account for monies received on behalf of the principal”.

Answer 6

An agent must account to the principal for all monies received on his behalf.

Question 7

What are the remedies the principal can use if an agent fails in his duties?

Answer 7

• Sue the agent for damages for breach of contract
• In certain cases, sue the agent for tort
• Dismiss the agent without notice for serious breach
• Fraudulent, rescind any contract made through the agent and refuse commisions