Agency Operations
Who the agent works for
A producer is the agent of the insurer for soliciting and binding business, but owes the customer reasonable care, prompt handling, and honest advice. That dual reality drives most Agency Operations questions.
Authority
Three kinds. Express authority is written in the agency agreement. Implied authority covers reasonable acts needed to carry out express authority, such as collecting premium. Apparent authority is created by the insurer's own conduct - blank company binders in the agency, a company website listing the agency, past acceptances of similar risks. Apparent authority is the classic trap: a producer with no actual binding authority may still bind the carrier if the company clothed the agency with that appearance.
Fiduciary duties
Premiums held for a carrier are trust funds. Agency-bill accounts must be handled so premium is available when due; commingling with operating funds creates licensing and E&O exposure. Escrow handling, timely reporting of claims and cancellations, and documenting advice in the file are the main E&O defenses. Expiration lists generally belong to the agency, not the producer or the company.
Rule of thumb
Advise in writing, confirm coverage changes in writing, and never treat a certificate of insurance as proof of coverage - a certificate is evidence only and confers no rights on the holder.
Worked example: a client calls on Friday to bind a new building. The producer says the client is covered. The carrier later declines because the agency lacked binding authority for that class. The agency likely pays, because company manuals, prior acceptances, and blank binders created apparent authority.