A company is an artificial person created by law. It is a
legal person. You cannot see it or feel it. But it can ‘do’ most things that a
natural person can do, except getting married, of course! A company can acquire
property or wealth, sell it; it can sue and be sued, and so on. The Life
Insurance Corporation of India
is a company. A life insurance company is also called an Insurer.
Any person who can do
a thing can also get it done through some one else. Thus a company, which
offers insurance to the public, can appoint someone else to do it on behalf of
the company. In this situation the company is called Principal and the person
authorized to act on its behalf is known as an Agent. It is a legal
relationship as per the Indian Contract Act 1872.
Who is an insurance
agent? Any person who possesses a valid License under section 42 of the
Insurance Act 1938 and is engaged by an insurance company to solicit and
procure insurance business is an Insurance Agent. He receives or agrees to
receive payment by way of commission or other remuneration in consideration of
his soliciting or procuring insurance business (including business relating to
continuance, renewal or revival of policies of insurance)[Sec.2(10), Insurance
Act, 1938]. They are governed by IRDA (Licensing of insurance agents)
Regulations 2000.
There are Corporate Agents for life insurers who are also
licensed to solicit and procure life insurance business. Here corporate bodies
work as life insurance agents. Bancassurance is banks working as insurance
agents. Corporate Agents are regulated through Regulations made by IRDA in this
respect.
Insurance Brokers too operate in India .
They are licensed under the IRDA Broker’s Regulations. Broking firms are expected
to be covered under professional liability insurance. Code of conduct as well
as functions of intermediaries is given in the respective Regulations issued by
IRDA. These topics will be covered in
detail later.
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