Chapter 4 Key Points

Question 1

What is an agent

Answer 1

a person who has the authority or power to act on behalf of another person, known as the principal

Question 2

when do questions of agency law arise

Answer 2

when an insurance intermediary makes a mistake or is generally careless in carrying out their duties

Question 3

how may agency be created

Answer 3

agreement or consent
ratification
necessity

Question 4

who can an insurance intermediary act on behalf of

Answer 4

the proposer/insured and the insurer

Question 5

what are the duties of an agent

Answer 5

to 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 6

what must an insurance intermediary do

Answer 6

exercise a level of care and skill that is appropriate for the class of agent they represent

Question 7

what happens with the knowledge which an agent possesses under the law of agency

Answer 7

it must be imputed to the principal
this is of particular importance in relation to the duty of disclosure in non consumer (business) insurance

Question 8

in which act was knowledge of insured clarified

Answer 8

the insurance act 2015

Question 9

what are the rights of an agent

Answer 9

remuneration and the right to indemnity

Question 10

which types of authority can agents have

Answer 10

actual (express or implied)
apparent or ostensible authority

Question 11

what is express actual authority

Answer 11

arises from the instructions which have been given to the agent, stating what is required and what is allowed

Question 12

what is implied actual authority

Answer 12

agents have implied authority to do anything which is incidental to or necessary for the carrying out of their express instructions

Question 13

what is apparent (or ostensible) authority

Answer 13

when a third party deals with an agent, often they will not know the exact limit of the agent’s authority, they are therefore bound to rely on what appears to be the authority of the agent

Question 14

what type of principle can a contract made by an agent be for

Answer 14

disclosed or undisclosed

Question 15

how can agencies be terminated

Answer 15

agreement
performance
lapse of time
withdrawal of authority
renunciation by the agent
death of principal or agent
bankruptcy
insanity
frustration