Agents and brokers gain their authority from

Agents and brokers derive their authority primarily from an agreement with their insurers. This relationship is established through a contract, which outlines the terms under which the agent or broker operates, including the scope of their authority to act on behalf of the insurer. This agreement often specifies the types of insurance products they can sell, the geographical area they can operate in, and any limits to their authority, such as underwriting or claims handling.

By securing this agreement, agents and brokers are empowered to solicit insurance applications, bind coverage, and provide various services to clients, all within the framework set by the insurer. This contractual relationship is foundational to the functioning of the insurance distribution model, as it defines the responsibilities and permissions granted to agents and brokers in serving their clients and the insurers they represent.