INSURANCE AGENCY AS A CAREER CHAPTER 2. AGENT:- An agent is one who acts on behalf of another. PRINCIPAL :- He is the person on whose behalf the agent acts. For e.g.,. In the court, the lawyer acts as an agent for his client who is the principal.
INSURANCE AGENCY AS A CAREER
Defines “Agent” as…
He is a middle man who acts or represents another person (Principal) while dealing with
a third party.
Defines “Principal” as…
Insurance Company (Principal) is the principal.
Insurance Agent (Middle person)
Prospect / Policy Holder (3rd Party)
In this case, the insurance company is the principal who will enter into a contract with the third party i.e. prospect & the insurance agent acts as a middle person who
represents the Insurance Company
An insurance agent is one who is licensed under Section 42 of the Act and is paid commission for soliciting or procuring insurance business , including business relating to continuance , renewal or revival of policies of insurance.
In other words is the principal.
The above legal maxim means
He who acts through others acts to himself ie.,
The principal is bound by what the agent does.
WHICH MEANS is the principal.
The Principal is totally bound and can be held liable for any act done by the agent.
The principal is liable for all the acts done by the agent. However he can restrict his liability by specifying the extent of authority granted to the agent.
It can be……
Implied Authority is the principal.
Eg. LIC does not authorize agents to collect premia (except first premium along with the proposal) from the policy holder. However, if he collects the amount, remits to the insurer & gets the receipts delivered to the policy holder implied authority can be inferred.
WHO is the principal.
According to Section 183 of the Contracts Act
WHO is the principal.
companies , firms,
cooperative societies etc
In case of collectives a CORPORATE INSURANCE EXECUTIVE/s is / are appointed who will be required to obtain licenses Others who work for the corporate agent will be called Specified Persons and they will be required to obtain certificates.
WHAT is the principal.
IS THE PROCEDURE FOR BECOMING
AN AGENT ?
The Insurance Act, 1938 (Section 42) states that an insurance agent must possess a license issued by IRDA.
The IRDA has authorized designated persons in each insurance company to issue licenses on behalf of IRDA.
The individual or corporate insurance executive
A person is debarred from holding a license or an issued license is subject to cancellation if
Applications for renewal have to made at least 30 days before the expiry of the license
An agent works on commission basis. A stated percentage of the premium collected through his agency is paid as commission.
Section 40 A(1) if the Insurance Act states that commission
Agent has the dual responsibility of being true to the interests of both the parties .