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.