Insurance agents and producers 1.6

Producer (Agent)

A person or agency appointed by an insurance company to represent it and to present policies on its behalf.

which of the following individuals represents the insurance company when selling an insurance policy?

producer

Express

Authority that is written into the producers agency contract, example would be the producers binding authority if written in the contract.

Apparent

Authority created when the producer exceeds the authority expressed in the agency contract, this occurs when the insurer does nothing to counter the public impression that such authority exists. Example: would be producers acceptance of premiums on a lapsed policy.

Broker

Licensed individual who negotitates insurance contracts with insurers on behalf of the applicant. represents the applicant or insured interests not the insurer and thus does not have legal authority to bind the insurer. Brokers license is not applicable in all states

Insurer (principal)

The source of authority from which the producer must abide responsible for all acts of a producers, when producer is acting within the scope of its authority. Producer may be personally liable when his/her action exceed the authority of the agency's contract.

Producers responsibilities to insurance applicant or insured

-Forward premiums to insurer on a timely basis -Seek and gain knowledge of the applicant's insurance needs -Review and evaluate the applicant's current insurance coverage, limits, and risks -Serve the best interests of the applicant or insured, although producers represent the insurer -Recommend coverage that best protects the insured from possible loss and NOT the most profitable coverage from the perspective of the producer -Life and health producers do not issue contracts or binders for life or disability insurance, and should not imply that coverage is in effect simply because a person submits an application and payment for the first premium

Producer's Responsibilities to the Insurer

Fiduciary duty to the insurer in all respects, especially when handling premium funds. Must keep premium funds in a trust account separate from other funds and forward to insurer promptly. Must report any material facts that may affect underwriting. Responsible for soliciting, negotiating, selling, and cancelling the insurance policies with the insurer. Duty to only recommend the purchase of suitable policies.

A producer has each of the following responsibilities to the Insurer, except:

a Duty to recommend only high rate policies.

Implied

business activities of providing quotes completing the applications and accepting premiums on behalf of the insurer.

which of the following types of authority does the public assume an agent has when quoting insurance?

implied

Law of Agency

the legal relationship formed between two people when one person agrees to perform work for another person.