CS Professional · Banking and Insurance - Laws and Practice · Professional Opportunities
Kavita is an individual who wants to act in a career that advises clients on choosing policies across several insurers and represents the client's interest, receiving brokerage from the insurer. A friend suggests she become an insurance agent. Which statement is correct?
A broker represents the client and can place business with multiple insurers, while an individual agent is appointed by insurers and is restricted in the number of principals. Kavita's aim of client-side advice across insurers therefore points to broking rather than agency.
- AAn agent can freely place business with any number of insurers like a broker
- BA broker represents the client and can place business with multiple insurers, whereas an individual agent works for insurers within regulatory limits on the number of principalsCorrect
- CBrokers and agents both represent only one insurer
- DAn agent represents the client and a broker represents the insurer
Explanation
Insurance brokers act on behalf of the client and can approach multiple insurers. Individual agents are appointed by insurers and are limited in the number of insurers they can tie up with, representing the insurer's side. Hence only the second statement is correct; the others reverse or blur roles.
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