California Life and Health Insurance Practice Exam

Express power given to an agent in an agency agreement is?

1. The authority to represent the client

2. The authority to negotiate policy terms

3. The authority to represent the insurer

4. The authority to bind the insurer to insurance contracts

The correct answer is: The authority to represent the insurer

In an agency agreement, express power refers specifically to the authority that is clearly stated and delegated to the agent by the principal. When this authority is granted, it allows the agent to act on behalf of the principal—in this context, the insurer. The agent acting as a representative of the insurer means they can undertake activities as stipulated within the scope of that express authority, such as marketing insurance products, collecting premiums, and facilitating transactions between the insurer and policyholders. This delegation is central to the agency relationship, as it establishes the framework within which the agent operates and makes decisions for the insurer. The focus here is on the representation of the insurer, which is the essence of express authority in agency agreements. The agent's obligations and permissions are explicitly laid out in the agency contract, creating a contractual relationship that defines the powers and limitations of the agent's role in interfacing with clients and managing insurance agreements on behalf of the insurer.