Professional Documents
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For e.g.,
Principal Client
Agent Lawyer
Country
Ambassador
In the court, the lawyer acts as an agent for his client who is the principal. An ambassador in a foreign country acts as an agent for his country (Principal).
Agent is a person employed to do any act for another or to represent another in dealing with a third person i.e.,
He is a middle man who acts or represents another person (Principal) while dealing with a third party.
Defines Principal as
Principal is the person for whom such act is done or who is so represented.
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 (Principal)
Defines
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
A person who has authorized license and can bring business for which commission is paid is an Insurance Agent. The business brought need not be new business. It can be business for renewal or revival also.
WHICH MEANS
The Principal is totally bound and can be
held liable for any act done by the agent.
AUTHORITY OF AN 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.
AUTHORITY OF AN AGENT
Expressed authority is stated by words, spoken or written. Implied authority is to be inferred from the circumstances of the case.
Implied Authority
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.
Individuals
Which means..
In case of collectives like companies, firms, banks a person will be appointed who will hold a license and the others who work along with him will have to obtain certificates.
LICENSE
The licence allows the person to act as agent for life insurer, for a general insurer or as a composite insurance agent working for a life insurer as well as a general insurer. No agent is allowed to work for more than one life insurer or more than one general insurer The licence issued by IRDA will be valid for 3 years Fees is Rs 250/- for individuals as well as corporate agents The fees for the certification of the specified person is Rs 500/-
The individual or corporate insurance executive must be at least 18 years old. have passed at least 12th standard or equivalent examination if he is to be appointed in a place with a population of 5000 or more or 10th standard otherwise.
Have undergone training for at least 50hours in life or general insurance business. In case of composite insurance agent 75 hours training is must. Must have passed the pre-recruitment examination conducted by the Insurance Institute of India or any other examination body recognized by the IRDA.
DISQUALIFICATIONS
A person is debarred from holding a license or an issued license is subject to cancellation if He is a minor Has been found to be of unsound mind by a court of competent jurisdiction. Has been found guilty of criminal breach of trust, misappropriation, cheating, forgery or abetment or attempt to commit any such offence.
DISQUALIFICATIONS (CONTD...)
Found guilty of or knowingly participating in or conniving at any fraud , dishonesty or misrepresentation against an insurer or an insured. Not possessing the requisite qualifications and specified training. Not passed examinations as specified by the Regulations. Found violating the code of conduct as specified by the Regulations
Applications for renewal have to made at least 30 days before the expiry of the license
RENEWAL OF LICENSE
Renewal Period At least 30 days before the expiry of license Before the date of expiry of license but not made at least 30 days in advance After the date of expiry of license
Normally be refused
RENUMERATION OF AGENT
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 shall be 35% of the first years premium 71/2% of the second and third years renewal premium 5% of subsequent renewal premium.
Exceptions
During the first ten years of insurers business , 40% may be paid instead of 35% of first years premium. 6% commission can be paid on the renewal premium even beyond the third year. Commission rates are less under term assurance plan for shorter duration policies under single premium plans under pension/annuity plans
AGENCY AS A PROFESSION
An agent is expected to obtain life insurance business and contribute to the revenues of the insurer. He should report on relevant features that affect the risk . Having met the prospect , he would be aware of the nature and characteristic of risk . He is therefore, called the primary underwriter.
AGENCY AS A PROFESSION
Agent has the dual responsibility of being true to the interests of both the parties . He is obliged to reveal all the important terms and conditions of the policy to the prospect even if they are restrictive and unpleasant. He is also obliged to report to the insurer all the true facts about the prospect .
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