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Overview of Insurance Professions

Learn about insurance agents, loss adjusters, underwriters, actuaries, lawyers, and other related professions in the insurance industry. Understand roles, responsibilities, and relationships within the field.

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Overview of Insurance Professions

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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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