Study 4 Flashcards
Intermediary
- The agent/broker negotiating insurance or reinsurance contracts for another
- Any party representing another party, in negotiation with a third party
Independent brokerage system
A system in which independent insurance professionals, licensed as insurance brokers, are contracted to sell insurance on behalf of an insurer or multiple insurers
Independent agency system
A system of marketing insurance through independent contractors (agents) who sell insurance on a commission or fee basis with one or more insurers
Exclusive agency system
A system of marketing insurance through licensed agents who represent only one company or a group of companies under similar management
Direct writer
Insurance company selling directly to the public and not through independent agents or brokers
General agent
One who is appointed by a company in a specific territory. He or she is usually given an exclusive territory and may appoint sub-agents in that territory
Law of agency
Applies when an agent is authorized to do something on behalf of a principal. The principal is the person or entity for whom the agent or broker acts
Express contract
One in which the terms of the arrangement have been specifically stated and agreed to by both parties either orally or in writing
Implied contract
One in which the parties have acted in such a way that it is understood that a principal-agent relationship exists, even though no expressed statement may have been made by either
Binding authority
The capacity to confirm to people who have been submitted insurance applications that they have insurance coverage. It gives agents or brokers the power to make decisions that enter insurers into contracts of insurance
Interim receipt
A temporary measure to insure in an agreed manner while waiting for the completed policy to be issued. Also known as a “binder”
Binder
A written or oral agreement given by an insurer to insure a risk, pending the insurance of a formal policy. A binder is deemed to be the policy and must be cancelled in the same manner
Cover note
A document with insurance, or the insurance protection provided
Risk management
Analyzing a risk to quantify the potential for losses in a specific investment and to decide what is the appropriate action to take (or whether not to take action)
