1. How do agents and brokers differ? 2. After hearing the advice that it is usua
ID: 2714153 • Letter: 1
Question
1. How do agents and brokers differ?
2. After hearing the advice that it is usually best to buy life insurance from a person who has been in the business at least five years, a life insurance company general agent became upset and said rather vehemently, “How do you think we could recruit an agency force if everybody took your advice?” How would you answer that question?
3. Is the inherently discriminatory nature of underwriting acceptable from a public policy standpoint? Would shifting to a primarily behavior-based approach to risk assessment be feasible?
4. What actuarial adjustments are built into the pricing of life insurance premiums?
5. Occasionally, Insurer X will reinsure part of Insurer Y’s risks, and Insurer Y will reinsure part of Insurer X’s risks. Doesn’t this seem like merely trading dollars? Explain.
6. What is the relationship between the following functions within an insurance company?
a. Marketing and underwriting
b. Underwriting and actuarial
c. Actuarial and investment
d. Legal and underwriting
e. Claims and marketing
f. Claims adjusting and actuarial
Explanation / Answer
1.
Insurance agents are the representatives of the insurance company. They get trained and licensed to sell company’s insurance products. Once they get license, it is understood that they will give advice as per the need of customers. But they are not accountable of doing so, what the insurance company is.
Insurance brokers are the agents of customers. They get trained and licensed from insurance regulatory board to do such act with fiduciary responsibility. Brokers have no responsibility towards the insurance company, but to perform duties for customers with mutual trust and confidence. Therefore, they are accountable to customers only.
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