CH 2: Distribution Systems and Producers

What two main branches do agencies have?

1. Agency Building

2. Career

In ________, a company taps into the existing pool of agents created by the building branch to create an _____ ______ ______, and it is dependent/independent?

In career, a company taps into the existing pool of agents created by the building branch to create an instant sales force, and it is independent.

What type of agencies are branches of major stock and mutual insurance companies?

Career Agencies

What type of agent owns the record of present policy holders and their expirations?

Independent agenta

What type of agent is a self-emp0loyed rep of the company and represents only one insurer or a group of related insurers?

Captive agents

What is one form of mass marketing in insurance?

Direct response

In the direct writing system, the insurance company uses ___ _______ instead of _______

Their own employees instead of agencies

Insurance agents and brokers can transact all classes of insurance other than what?

Life, disability, or health insurance

Responsibilities of an agent are to whom?

The company

What are the 3 types of authorities/powers companies give to agenets?

1. Express

2. Implied

3. Apparent

Expressed authority is when it is ______________.

In writing

Implied authority IS/IS NOT in writing but _______ in order to transact business

NOT in writing; Assumed

What is apparent authority?

It is the authority the public assumes the licensee has and the insurer takes no action to change this assumption

Performing tasks that help to establish agency relationship, but are not covered by your contract, is called what?

Implied Authority/Powers

Who acts as the first line of defense against bad risks, which is why they’re often referred to as field underwriters?

Agents

Agents = ? = ?

Agents = Producers = Field Underwriters

What is an insurance solicitor?

A person employed to aid a p&c acting as an insurance agent in transacting insurance

Solicitors are licensed to sell property and casualty products - T/F?

TRUE

What type of licensee is authorized to transact auto insurance (commercial and non-commercial), watercraft, and residential property?

Personal lines licensee

A person is transacting insurance and must have a valid license if they perform what actions?

Solicitation of insurance

Negotiations preliminary to the execution of a contract

Execution of a contract

Transactions that later result from the operation of the contract

When a person commits SNET without a license, what are the legal reprucussions?

Fine <$50k or imprisonment in county jail <1 year

Error and Omissions Insurance covers what?

Covers liability for mistakes and failures to act of nonmedical professionals

What type of licensee is the only one allowed to transact with a non-admitted insurer in CA?

Surplus Lines Broker

Surplus lines broker = ?

Non-admitted insurance

A solicitor holds which license?

P&C broker-agent or personal lines broker-agent

Which marketing distribution system involves the agent representing more than one insurer and more than one company?

Independent agency

In a legal relationship, which authority does a principle (company) give the agent in writing?

Express authority

T/F: The UW process consists of monitoring the decision.

TRUE

A binder can be extended how many additional days?

90 days

What adjuster does not require a license?

Insurance adjuster

What is the extent agents or brokers are able to transact as a solicitor?

An agent or broker CANNOT transact as a solicitor, but a solicitor CAN transact as a broker or agent

What is the Law of Agency?

The relationship between agent and principal

What lines of insurance are no binders issued in?

1. Life excess policies in excess of $1M

2. Life insurance

3. Health insurance