MEDICAL: 1. Individual who is authorized by another person, the principal, to act on the principal’s behalf for contracts with third parties. 2. Insurance company representative licensed by the state that sells insurance policies and services the policyholder for the insurer. There are independent agents and exclusive agents. Life insurance agents may also be called life underwriters. Also called insurance agent, insurance broker, or field underwriter.*******A licensed person or organization authorized to sell insurance by or on behalf of an insurance company.********”Insurance companies use two different types of agents to sell insurance and financial products: independent agents and/or captive agents. These agency arrangements take several forms outlined below.
An independent agent is self-employed, owns his or her own business, and represents multiple insurance companies. Terms of the relationship with each company are delineated by contract. This type of agent is paid a commission for each policy sold and is responsible for all of the expenses
of his or her agency.
While independent agents have certain contractual and fiduciary responsibilities to each insurance company, the agent is generally free to obtain the best available coverage for the client from the companies represented.
In some situations, independent agents will have a primary company for whom they work. They maintain, however, the freedom to write policies with other companies. For example, an independent agent may represent GMAC Insurance and must write the majority of the policies with GMAC. However, if GMAC is unable to write a policy for a customer for any reason, the independent agent is free to seek other insurance companies on behalf of the client.
The benefits of being an independent agent include the freedom from strict regulations by a parent company, freedom to cross-sell products even if it means selling a policy from a different company, ability to compare prices, products, and services among a variety of insurance
companies, and the ability to sell product from a number of different insurance companies. There are also disadvantages of being an independent agent. The primary disadvantage is the person must use his or her own resources to start the busine No resources or allowances are received from a parent company and the only income is normally commission. Thus, the agent’s income is based entirely on selling insurance products. Another disadvantage is a lack of branding. Companies that primarily use captive agents such as State Farm and Allstate build strong national identity that is hard for the local independent agent to compete with.
Captive agents, also known as exclusive agents or direct writers, are usually restricted to representing only one insurance company and are restricted contractually from selling insurance for another company. The best known of this type company is State Farm. Captive agents may be independent contractors, that is, self-employed or they may be employees of the company they represent. (See Direct Writers)
The goal of the captive agent is to develop business for his or her parent company. In exchange, the insurance company typically provides the captive agent with an office allowance to cover rent, utilities, and other office expenses. In addition, most captive agents are able to participate in the company’s retirement plan and receive life, health, and other benefits. Captive agents also receive periodic training from the parent company on new products and selling skills.
The number of captive agents has been slowly declining as insurance companies look for ways to cut costs and streamline operations. Many companies that used captive agents have gone to a dual distribution system by adding independent agents. Another cost saving move companies have employed is to go directly to the customer through advertising, inbound telemarketing, and the Internet.”
*************
Someone who acts for another person (the principal) usually for reward. There are four main classes of agent that may be involved in the underwriting of insurance and reinsurance risks by Lloyd’s underwriters: members’ agents, managing agents, brokers and coverholders. In addition, there are Lloyd’s agents which are independent businesses that provide surveys and loss adjusting services to managing agents, insurance companies and others on a worldwide basis. Further in some situations one underwriter may act as the agent of other underwriters (see general underwriters’ agreement).
******
UK: One who solicits, negotiates or effects contracts on behalf of another such as an insured or insurer. His right to exercise various functions, his authority and his obligations are subject to the terms of the agency contract and subject to certain legal principles such as the exercise of care and skill and observing good faith. See INSURANCE BROKER; LLOYD’S AGENT; MANAGING AGENTS; INSURANCE INTERMEDIARY.
*****
a person who introduces insurance business to the insurer, in law an insurance agent is agent, if at all, for the prospective policy holder although remunerated by the insurer; the term is also used of the employees of an insurance company who seek business for the company.