Insurance Intermediaries Flashcards
Link between insurers and consumers
Insurance intermediaries
Independent business person who may place business with any number of insurers
Broker
Represents one company only
Agent
One who has the authority to manage all of a company’s business within their territory, to appoint other agents and settle claims
General agent
Where do agents and brokers obtain their authoriy
Agreement or contracts entered into
2 types of contract’s between insurer and intermediary
Express, Implied
An arrangement that is specifically stated and agreed by both parties (oral and written)
Express
Parties have acted in such a way that they understood that a principal - agent relationship exisits
Implied
the ability to commit an insurer to a contract of insurance
Binding Authority
The confirmation that insurance coverage is in effect (oral or written) and given to the insured
Binder
Mandate
Contract
Principal
Mandator
Agent
Mandatary
A notice and confirmation to the insurer that it has been bound to a contract of insurance (given to the insurer)
Cover note
Requirements of intermediaries
operate within the scope of the contract with the insurer and operate within the authority of the intermediary’s license
What does a trust account do?
Collect premiums
What does an operating account do?
“general business account”, commissions deposited, operation expenses withdrawn
The share of the premium allowed to the broker/agent for having produced the business
Commission
The portion of the premium the broker/agent has to submit to the insurer
Net Premium
How to calculate net premium
Policy premium + commission = net premium
Regulations of insurance agent/broker
Qualification
Licensing
Operating requirements
Renewal of License
