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Chapter 5: Insurance Occupations

Chapter 5: Insurance Occupations. INSURANCE OCCUPATIONS. Insurance Agent Loss Adjuster Underwriter Actuary Lawyer Other Occupations. INSURANCE AGENT. Usual link between the consumer and the insurance company for personal lines. Commercial insurance often involves brokers.

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Chapter 5: Insurance Occupations

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  1. Chapter 5:Insurance Occupations

  2. INSURANCE OCCUPATIONS • Insurance Agent • Loss Adjuster • Underwriter • Actuary • Lawyer • Other Occupations

  3. INSURANCE AGENT • Usual link between the consumer and the insurance company for personal lines. • Commercial insurance often involves brokers. • The agency relationship is controlled by agency law

  4. LAW OF AGENCY (Common Law) • Agentis a person authorized to act on behalf of another person (principal). • Duties of the agent: • Loyalty • Duty not to be negligent • Duty to obey instructions • Duties of the principal: • Pay the agent for services rendered • Meet other contractual obligations (training, expense reimbursement, etc.)

  5. Agent’s Authority • Agents receive authority from principals in several ways • Agency agreement (contract) • Ratification • Apparent authority • Scope of authority can be established in the Agency Agreement - contract between agent and the company • Agency agreement spells out extent of authority and all the contract particulars.

  6. Types of Insurance Agents • In Property and Liability • When limited to soliciting business - called "special" or "soliciting" agent • When agent able to bind principal then called "general agent" • In Life Insurance • Insurance agents are soliciting agents because they do not have the power to bind. • General agents (branch managers) are hired to develop a geographic territory.

  7. Insurance Brokers • Brokers also market insurance in both life and health and property and liability insurance • Brokers do not have the power to bind • Broker is agent of the consumer - not the company

  8. Comparison of Agents and Brokers • AGENCY RELATIONSHIP • Consumer agent Company • BROKERAGE RELATIONSHIP • Consumer Broker Company • QUESTION: WHO DOES THE AGENT WORK FOR?

  9. DISTRIBUTION OF INSURANCEProperty and Liability Direct Writers Independent Agents • Represents severalcompanies. • Own the business • Paid commissions • More service • Local help • Selectcompany • Employee /Agent usuallypaid by salary + Commission. • Lower Price • Standard Contracts

  10. DISTRIBUTION OF INSURANCE Life Insurance Company • Branch manager has control of territory and recruits and trains soliciting or special agents • Life insurance agents can never bind coverage - authority limited power to bind remains at the home office General Agent orBranch Manager Soliciting or Special Agents

  11. LOSS ADJUSTERSor Claims Investigator • Loss adjusters make the product perform • Steps in adjusting a claim • Investigate • Determine if policy covers • Determine amount of the loss • Pay the claim • Independent Adjusters vs. Company Adjusters vs. Public Adjusters

  12. LOSS ADJUSTERS • QUESTION: Why do insurance agents and loss adjusters have to be very careful what they tell insureds when they report a loss or deal with them? • Waiver - voluntary relinquishment of a know right. • Estoppel - legal order to create consistent behavior.

  13. UNDERWRITER • Job is to accept exposures at appropriate rate • Reject application if underwriting rules do not allow acceptance • Must be a skillful judge of people • Goal is to produce a group of insureds by categories whose actual experience will approach expected. • Goal is NOT to reject people going to have losses.

  14. ACTUARY • Develops statistics and classifications for insurance rates. • Reviews past and projected future results. • Involved in product development. • Regulatory compliance issues. • Calculation of participating dividends.

  15. LAWYER • Lawsuits • Wording of insurance contracts • Deal with regulatory agencies • General advice and counsel

  16. Other Occupations • Financial administrators • Accountants • Architects • Engineers • Doctors • Marketing, Advertising • Personnel Administrators • Computer System Operators

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