Transcript INSURANCE AGENCY AS A CAREER

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.,
Principal
Agent
Client
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).
THE INDIAN CONTRACTS
ACT
(Section 182)
Defines “Agent” as…
• 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.
THE INDIAN CONTRACTS
ACT
(Section 182)
Defines “Principal” as…
• Principal is the person for whom such
act is done or who is so represented.
Insurance Company (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
(Principal)
THE INSURANCE ACT
( Section 42)
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.
“qui facit alium facit perse”
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
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 the Principal
It can be……
EXPRESSED
Or
IMPLIED
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.
WHO
CAN
EMPLOY
AN AGENT?
The Contracts Act
(Section 183)
According to Section 183 of the Contracts
Act
Any person
• who is a major &
• who is of sound mind.
WHO
CAN
BECOME
AN AGENT?
• Individuals
• Collectives like
companies , firms,
banks,
cooperative societies etc
CORPORATE INSURANCE
EXECUTIVE
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.
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.
WHAT
IS THE
PROCEDURE FOR
BECOMING
AN AGENT ?
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.
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/-
QUALIFICATIONS TO GET A LICENSE
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.
QUALIFICATIONS TO GET A LICENSE
(Contd)
• Have undergone training for at least 100
hours in life or general insurance business.
• In case of composite insurance agent 150
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
Amount( Rs.)
At least 30 days before 250
the expiry of license
Before the date of
350
expiry of license but
not made at least 30
days in advance
After the date of
expiry of license
Normally be refused
Prior to renewal of license the
Agent should have completed
• 25 hours practical training in life or
general insurance business.
• 50 hours practical training in life and
general insurance business in case of
composite insurance agent.
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 year’s premium
• 71/2% of the second and third year’s renewal
premium
• 5% of subsequent renewal premium.
Exceptions
• During the first ten years of insurer’s business
, 40% may be paid instead of 35% of first
year’s 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.
Agent - Primary Underwriter
• He is expected to disclose all the relevant
facts that would affect the risk. Since he
is the person who has seen and
observed the prospect, he is aware of the
nature & the risk. Hence he is obliged to
report all the true facts about the
prospect.
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 .
THANK YOU
M. J. MALIK
S.B.A.
836 B.O.
AHMEDABAD D.O.
09879094925
[email protected]