09. The Agent and Authority and Adjusting

Question 1

Agent

Answer 1

One who receives the authority to act on behalf of someone else

• sales agent: receives authority to sell
• insurance adjuster: receives authority to settle claims brought against the insurer

Question 2

Authority ( of an agent )

Answer 2

Agents receive authority through written contract

sales agent: contracted to sell and service

adjusters: contracted to settle claims that arise against the adjuster

Question 3

Power to Bind

Answer 3

An agent’s authority can bind

• what the agent says or does can bind the insurer
• agents should take the utmost care in what they say and do
• even if the agent makes mistakes, the insurer may have to accept them

Question 4

Responsibilities of an Agent ( 3 )

Answer 4

• adhere to or follow the contract
• use reasonable judgement and care at all times
• provide all necessary information and documentation to the insurer

Question 5

Express Authority

Answer 5

Authority that is directly granted to the agent in writing via the agent’s contract

usually gives agents authority:

• sell policies
• collect premiums
• issue binders
• offer discounts
• cancel insurance

Question 6

Implied Authority

Answer 6

The authority that the public reasonably believes the agent to have, based on the agent’s representations

often include:

• portraying oneself as a representative
• wearing a name tag with company logo
• handing out company business cards
• words and actions that go “hand-in-hand” with express authority and are usual in order to perform an agent’s duties

Question 7

Apparent Authority

Answer 7

Indirect authority that is granted when the insurer does not correct its agent, even though the agent may be acting in error

• granted when the insurer does not act
• by not correcting the agent, the insurer implies consent

Question 8

Adjuster’s Apparent Authority

example

Answer 8

• adjuster pays the claimant too much for the loss amount
• insurer ignores the mistake and issues check
• apparent authority is thus granted
• claimant typically will not be required to pay back

Question 9

Q: what are the four types of sales agents?

Answer 9

A:

1. Independent insurance sales agent
2. Exclusive agent
3. General agent
4. Direct writer

Question 10

Independent Insurance Sales Agent

Answer 10

• self-employed
• offer insurance from more than one company at the same time
• they can compare and give rate quotes from different companies
• find a policy that best suits the customer

Question 11

Exclusive Agent

Answer 11

• also called captive agent
• commissioned
• represents only one insurer and only their policies

Question 12

General Agent

Answer 12

• works for one insurance company
• supervises other exclusive agents
• trains other agents

Question 13

Direct Writer

Answer 13

• salaried employee

- works for only one company

Question 14

Sales Agent’s daily activities

Answer 14

• sell insurance policies
• service policyholders’ contracts
• collect the premiums
• represent the insurer