CHAPTER 6

1. CHAPTER 6 INSURANCE OCCUPATIONS

2. INSURANCE AGENT • The insurance agent is the link in the marketing chain connecting the insurance company with the insurance consumer. • Agent: is authorised to act for another person • Principal is the person that an agent act on behalf.

3. DUTIES OF AGENTS • LOYALTY • NOT TO BE NEGLIGENT • OBEY INSTRUCTIONS • INFORM PRINCIPAL • RESAONABLE CARE

4. AUTHORITY • ACTUAL AUTHORITY is given to agents form their principals. • EXPRESS AUTHORITY provides details of the agent’s duties and responsibilities., • INCIDENTAL AUTHORITY is to do things normally required to accomplish the specified acts accompanies express authority.

5. INSURANCE AGENTS • GENERAL AGENTS: have the authority fo bind their principal to insurance contracts. • SPECIAL OR SOLICITING AGENTS: have the authority to solicit. • The principal is bound to agent’s actions. IF agents go beyond the scope of thier authority, substantial legal issue may be present.

6. TWO FUNDAMENTAL DOCTRINES • 1.Knowledge given the agent is considered knowledge provided the principal • 2. Payment made to the agent is considered payment conveyed to the principal when there is actual authority.

7. INSURANCE BROKERS • An insurance broker is an agent with the limited to find an insurer willing to accept a transfer of the principal’s risk. • The principal is NOT the insurance company.

8. ADVANTEGES-DISADVANTEGES There is a possibility of both the principal on the broker do not pass along the facts to the insurer. There is a possibility of the fact that the insurance contract can be voided becauseofconcelement of material facts.

9. BROKER • Broker can not bind insurer to contracts. Some brokers are licenced as agents and have the capacity to bind authority from a particular insurer. However, this is outlawed. • The duties fo principal are the same as agents.

10. BROKER • The broker earns a commission as a percentage of the premium charged theprincipal. • The Dillema: The principal’s choice would be served by the lower cost insurer but the broker’s interest would be met by the higer-cost insurer.

11. BROKER • The brokers are especially useful in commercial insurance. Business firms have unique properties or liablity exposures and require insurance contracts writtten to their ows specifications.

12. BROKERS • GENERAL BROKER • A SURPLUS LINES BROKER • A LLOYD’S AUTHORISED BROKER

13. INDEPENDENT AGENCY SYSTEM • They represent several different insurance companies. • The independent agent may place a client’s homeowner’s insurance with one company and the same client’s automobileinsurancewith another company. • They earn only commission .

14. EXCLUSIVE AGENT OR DIRECT WRITING SYSTEM • Insurers call property insurance companies selling insurance through thier own employee-agents direct writers. • Exclusive agents are not employees of the insurer but agree to place all their business with one insurer. • Direct writing agents are employees of one insurer. They are paid salaries plus commission or bonus.

15. LIFE INSURANCE AGENTS AND BROKERS • Life insruance agent is under contract to one company. • Unlike the property agent representing the direct writer, however, life insurance agent is not technically an employee of the company. • A contract between general agent and insurancecompanythatspecifiestheanouthorityandrights.

16. LIFE INSURANCE AGENT`S DUTIES • Simply sell and provide information on insurance contract • Inform clients, motivate to take a specified course of action • Provide service before and after losses • Exercise judgement in selecting clients for insurance company • Must be familiar with social security and other government benefits

17. LOSS ADJUSTER(insurance investigator) • After a loss, the insured must notify the insurance company. • The notice represents a CLAIM for payment. • Before settling the claim, the insurer conduct an investigation. • Investigation is done by a LOSS ADJUSTER(claims auditor or claims agent)

18. Loss Adjuster • In property insurance, this investigation is very important where losses are partial or the damage is not clear. • Life insurers use loss adjusters to investigate some claims for accidental death benefits, disability income benefits and health insurance benefits. • Most of the work is done outside the office • In some cases only fire marshal`s report or police reports are needed.

19. LOSS ADJUSTER • Sometimes the adjuster may determine for a fact that fraud by an insured was involved in the loss. Such as faked accidents, business and vechile arsons etc. • Sometimes insured and adjuster cannot agree on the amount of the claim. • If the claim is denied and then the insured can hire a lawyer and sue the company for the breach of contract.

20. LOSS ADJUSTER • Insurance companies often use loss adjusters who are not their own employees. • They hire the services of an independent adjuster or an independent adjustment bureau. • Independent adjusters are hired when loss needs specialization. • Independent adjusters are agents of insurer , a public adjuster is an agent of the insured.

21. UNDERWRITER • Reviews applications for insurance and then either accepts them at an appropriate rate or rejects them • Makes decisiond based on criteria established by the company`s top management and personal experience and judgement. • Possibility of adverse selection

22. ACTUARY • An insurance company mathematician who complies statistics of losses, develops insurance rates, calculates dividends and evaluates the financial standing of the insurance company.