STUDY 7-SALES AND DISTRIBUTION OF INSURANCE Flashcards
binding authority
The capacity to confirm to people who have 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.
operating account
An account used to hold funds for the day-to-day operation of a business.
trust account
An account managed by an individual or a corporation for the benefit of another, known as the “beneficiary.”
trust
The transference of property to an individual or a corporation, known as the “trustee,” who holds the property for the benefit of an individual, known as the “beneficiary.”
intermediary
(1) The agent/broker negotiating insurance or reinsurance contracts for another. (2) Any party representing another party, in negotiation with a third party.
contingent commission
A commission paid to an agent that depends upon the profit the insurer has realized from the agency’s business.
rapport
Confirms a common bond in a relationship between people that often leads to agreement and harmony, occurring naturally as people spend time together and share common experiences or growing out of shared interests, heritage, background, or common behaviours.
independent brokerage system
A system in which a licensed, independent insurance professional acts for an insurance buyer to obtain insurance from one or more insurers that have authorized the broker to sell insurance on their behalf.
independent agency system
A system in which an independent contractor (the agent) represents one or more insurers in selling insurance, for a commission or a fee, on their behalf.
direct writer
Insurance company selling directly to the public and not through independent agents or brokers.
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.
exclusive agency system
A system of marketing insurance through licensed agents who represent only one company or a group of companies under similar management.
general agent
One who is appointed by a company in a specific territory. They are usually given an exclusive territory and may appoint sub-agents in that territory.
