Chapter 8: Role of a Broker Flashcards
Define ‘delegated authority’
Someone the insurer has delegated underwriting authority to
Define ‘agent’
One who is authorised by the principal to bring the client into a contractual relationship with the third party
Define ‘principal’
The one who is brought into the insurance contract with a third party
Define ‘law of agency’
Everyone who acts on behalf of another person is an agent, and we accept responsibility for the actions they take on our behalf
WHat are the three ways the relationship between agent and principal can arise?
Consent, necessity, ratification
Define ‘agency by consent’
Principal consents to this by means of express appointment, and teh terms are writtem down
Define ‘terms of business agreement’
Documents used in the London Market to set out clearly the rights and responsibilities of the principal and the agent
Define ‘agency by necessity’
When a person is entrusted with someone else’s goods and it is necessary to act in a certain way to preserve the property in an emergency
Define ‘agency by ratification’
When an agent acts without authority, but the principal agrees to this after the event- they ratify it
When is a broker considered the agent of the insured?
When the broker gives advice on placing the insurance or on how to make a claim
When is a broker considered the agent of the insurer?
When they can bind cover, or have authority to collect premiums and does so
What duties does an agent have to their principal?
Obedience, personal performance, due care and skill, good faith, and accountability
What duties does a principal have to their agent?
Renumeration and indemnity
Define ‘actual authority’
Can be express authority, or implied authority
Define ‘apparent authority’
That which should come with a certain position in an organisation- may not actually have it, but from the outside it seems like they do
