Insurance Brokers

The term insurance broker is defined as a person who,as independent contractor,carries on insurance broking business and includes a reinsurance broker.’

An insurance broker is an ‘agent’ who normally acts behalf of the insured and is normally acts on behalf of the insured and is normally not tied to any one insurer.His job is to advice his clients on the most suitable covers at the most economic cost.Brokers are deemed to be knowledge of covers available ant the rated charged.In addition to advising clients and placing business on their behalf,the brokers are remunerated through payment of brokerage which is usually percentage of the premium.

Insurance Agents

Insurance agent to mean ‘a person who does all or any of the following:

a.solicit or obtains a proposal for insurance on behalf an insurer;
b.offers or assumes to act on behalf of an insurer in negotiating a policy or
c.does any other act on behalf of an insurer in relation to the insurance ,renewal or continuance of a policy’.

Depending on the terms of the agency agreement,an insurance agent may be authorized to solicit insurance business,a collect premiums an issue covernotes on behalf of the insurance company.Insurance agent are remunerated through payment of commission by the insurers.

The insurance market

A market is a term used for describing the facilities for buying and selling product.An insurance market therefore refers to facilities for buying and selling insurance.Insurance ,in a broad sense,may include private insurance ,government compensatory scheme and Takaful business.In This chapter,The term insurance shall for practical purposes be confined to the market for private insurance.

Obligations Of The Principal

The principal has always the following duties towards his agents:

1. To pay remuneration and expenses as agreed ;or failing custom,to pay what is reasonable.




2. Indemnity the agent against consequences of any act lawfully done,within his authority,om behalf of his principal.

The Extent of the Agent Authorithy

Under the agency common system,an insurance agent is appointed by the insurer :-

a-For the primary purpose of canvassing for new business;

and

b- to carry out other tasks or duties as maybe required by the insurer from time to time and no other purposes.

As in other agency agreements,an insurance agent also has his own limits of authority.

Premium Collections

When payment of premium is made to an insurance agent,by the policyholder such payment is deemed to be payment to the insurer.Even if the insurance agent does not remit the said premium to the insurer,the insured still be on cover.On te other hand,if an unauthorized agent received money form the insured or the general public,he does not make the insurer liable for his misdeed.It is important to note that as long as the agent has not deposited the money with the insurance with the insurance company,he continues to be responsible to the policy holder.

Premium Collections

When payment of premium is made to an authorised insurance agent,by policy holder such payment is deemed to be payment to insurer.Even if the insurance agent does not remit the said premium insurer,the insured would still be cover.On the other hand,if an unauthorized agent receives money from the insured of the general public,he does not make the insurer liable for his misdeed.Its is important to note that as long as the agent has not deposited the money with the insurance company,he continues to be responsible to the policy holder.

Apparent Or Ostensible Auhority

Any representation made by the principle which induces a third party reasonably to believe that a particular person is an agent of the principle makes the principle liable for the agents actions.

This is know as apparent authorithy.The representation may be by words or by conduct;it must clearly indicate that the agent has authority to do a particular act on behalf of his principle,and the representation must be made to the person seeking to hold the principle liable.

Apparent authorithy is also known as authorithy by estoppel.Where one has so acted that form his conduct he leads another to believe that he has appointed someone to act as his agent and knows that the other person is about to act on that belief,he is estopped from denying the existence of the agency.An apparent authority is based on belief that the agent had the authority.Therefore ,a third party cannot rely on this plea if he had actual or contructive notice that in fact the agent had no authority,of if the circumstances should have aroused his suspicious.

What is Universal Agent?

A universal agent is one who has unlimited authority.He may do anything for his principal which the principal himself was competent to do.

What is General Agent?

A general agent is one who may do anything for his principal within the limits of a general authorithy conferred upon him..e.g an insurance agent who is authorized to canvass for new business but who could not normally grant policy loans and bind his principal.

What is special agent?

A special agent is one who is appointed to do a specific act or transaction,e.g a person appointed as a proxy to attend an an annual general meeting of company on behalf of the shareholder.

Implied Authority

The implied authority is not expressed to the agent either orally or in writing .

However such authority can be implied from the circumstances concerning the relationship between principle and the agent,and it is implied that agent.

• can carry out acts which are within the terms of his express authority;
• has authority to do anything which has necessary for,or incidental to carrying out of his expressed authority.
  

Usual Authorithy

When a agent carries on a particular trade or profession,his express and implied authorithy carry with them a usual authorithy.

Such authorithy enables him to perform acts which are usual in the particular trade or profession.On the other hand,if there are certain customs of a trade,he has actual authorithy to comply with such customs.Examples of usual authorithy may be given as follows:

• An investment manager with intructions to sell has a usual authorithy to sign a memorandum of the contract of sale on behalf of the vendor.
• A property agent who has authorithy to sign a contract on behalf of the owner.

Express Authorithy

An express authority may be given to an agent orally or in writing.The most important factor is that the authority given has to be expressly stated in writing.The written authority may or may not be under seal.Hence,if the writing is ambiguous,for example- open to misinterpretation ,no liability can fall on the agent provided that interprets the ambiguity in a way in which it can reasonable be construed,even though it was not the way principal intended.

Obligations Of The Priciples

The principles has always the following duties towards his agents:

• To pay remuneration and expenses as agreed;or failing agreement,as customary;or failing a custom,to pay what what is reasonable.
• Indemnify the against consequences of any act lawfully done,within his authority,on behalf of principal.

Duties Imposed On An Agent

Some of the duties imposed on an agent in addition to express contractual obligations are provided as follows:

• To render accounts to the principle required
• Not to let his own interest conflict with his obligations to the principals
  
• Not to disclosed confidential information obtained during the course of his duties as an agent to other parties except the principle insurance company.
• Not to take any party with whom he deals on behalf of the principle.
• Not to delegate his duties to a sub-agent without authority,express or implied.
• To comply with his principal's instructions and to notify him when compliance become impossible.

Duties Of An Agent

The contract of Agency between the principle and agent is normally in writing .However ,it may be verbal .It contains the terms and condition s relating to the conduct of the agency and the remuneration payable to agent.

Unlike an employee,the agent is an independent businessman who is not required to devote any specified time to the amount of business he has transacted.

Frequently,a considerable portion of time is spent of agency business outside the normal business hours.

An agent is under a duty to perform his work with care,skill and diligence and also to comply with the terms of his agency agreement.

Authority Of An Insurance Agent

An agent can act only within the authority granted to him by the principal.The authority given to an agent maybe expressed,implied or apparent.It is also to know about the usual authority of the agent and related ratification thereof.

Authority as below -

1. Express Authority
   
2. Implied Authority
   
3. Apparent Or Ostensible Authority
   
4. Ratification
   

For more details see the next post...

Charasteristics Of Insurance Agents

The essential characteristic of an insurance agent is that he is vested with legal power to establish contractual relations between the insurance company and the policy holders.

The fact that the majority of insurance agents are recruited by field supervisors or managers who,in turn,hold agency contracts with insurance companies does not change this basic characteristic as in the ultimate analysis ,such insurance agents hold contracts for services with the insurance companies and not with their recruiters.

Rights Of And Insurance Agents

The Agent's most important right is the right to receive payment for his services,usually in the form of commission.

The agent is also entitled to reimbursement of moneys which he has expended with express authorithy of his principal .However ,such expense has to be reasonable and within acceptable limits.

The agent has the right to perform his duties in the manner which he considers to be appropriate.He may be reject any attempt by his principal to control the manner in which he works.

Classes Of Agent

Every agent falls into one of the following three categories.They are classified in accordance with the authority provided to them:

1. Special Agent
2. General Agent
   
3. Universal Agent

See also - a .What is Special Agent?

b.What is General Agent?

c.What is Universal Agent?

Insurance Agents - Why Have A Website?

Agents Of Whom?

The legal maxim applicable to agency generally is qui facit per alium facit per se which means"he who acts through another is himself perfoming the act."

Thus,a duly appointed insurance agent acting within the scope of his authorithy,binds his principal by this actions just as though the principal ha had performed them personally.Because of this,it is particularly important in respect of any givenaction decide for whom the insurance agent acted at the relevant time.It is,therefore,quite possible for an agent of the insurer to be legally regarded as agent of the insured for given act,act vice versa.