Flashcards in General Insurance Principles - Insurance Producers Deck (15):
An individual legally considered a representative of the insurer that employs them.
An individual representing an insurance applicant, not the insurer.
Common Law Rules of Agency
A relationship between two parties that involves a principal and an agent. The principle is the party on whose behalf the agent acts. With insurance, the insurer is the principle and the agent or broker is the agent.
Career (Captive) Agency System
A company employs agents under the supervisions of a general agent or agency manager.
Independent Insurance Broker
An insurance professional who represents multiple insurers.
A fiduciary relationship exists when one party handles money or other property on behalf of another. Out of this relationship comes the producer’s fiduciary duty to act in the best interests of the insurer. A producers also has a fiduciary responsibility to customers and should act in good faith and with integrity.
Agents' Powers of Authority
1.) Expressed Authority
2.) Implied Authority
3.) Apparent Authority
The contract between the producer and insurer sets forth certain acts and duties the producer is specifically authorized to perform. This authority is express authority.
Not all of the activities that an agent normally performs are expressly stated in the agent's contract. For the sake of effective business, insurers allow their producers to engage in many sales-related activities not expressly listed in any agreement. This is implied authority.
An agent's authority is implied when it
1.) Is intended to be given by the insurer;
2,) Usually relates to the general customs of the business; and
3.) Is not contractually provided or specifically explained.
Apparent authority is the third type of authority that an agent can assume. It is authority that
1.) The contract does not provide;
2.) The insurer does not intend; yet
3.) Reasonably appears to the customer to be granted to the agent based on the agent's statements and the actions (or inactions) of the insurer.
Document that explains the general features, benefits, and conditions of the type of insurance an application is considering.
Document that provides detailed information about the specific policy that is being purchased.
A way to measure the relative costs of an insurance policy in relation to other policies by using the factors of premiums, cash value, and policy dividends.
Life Insurance Surrender Cost Index
Compares costs at a future date when the policy might be surrendered for cash value.