Agent
An agent is a person who acts on behalf of another, in the case of insurance the agent will act on behalf of the insurance company that he represents. The insurance agent is therefore an authorized representative of the insurer. An agent must be licensed and qualified in terms of South African law to act as an intermediary between the insurance company and the proposer (the client.)
An agency contract will be drawn up to establish agreement to the legal relationship between the agent and the insurer. The agency contract will contain the authority of the agent to act on behalf of the insurance company, as well as the commission structure applicable to him. It will also stipulate which products he is allowed to sell, i.e. short term insurance such as car insurance or long term insurance such as life insurance.
We find two types of agents in the insurance business:
- Exclusive (or captive) agents who will represent only one insurance company and will sell only that company’s products. They can be salaried employees of the company or work on a commission only basis.
- Independent agents are self-employed and represent a number of insurance companies. They are compensated in the form of commission earned for any business they write on behalf of an insurance company. Independent agents are also referred to as non-exclusive agents.
Some agents are specialist in their field, for example you will find agents that specialize in car insurance.