1. Describe what expressed authority, implied authority, and apparent authority are and give an example of each.

Expressed Authority is specific authority given by the principal to the agent. Expressed is authority is specified in the terms of the agency contract. An example is binding authority where the agent can bind coverage even though the documents/endorsements have not been processed with the Insurance Carrier.

Implied Authority is the authority implicitly conferred on an agent by custom, usage, or a principal's conduct indicating intention to confer such authority. Implied authority is the ability of the agent to act on behalf of the carrier in situations where it is necessary to accomplish task stated in the agency contract. An example given, is collecting insurance premiums even though it is not specifically stated in the agency contract that the agent could do that.

Apparent Authority is the appearance of authority of an agent to act on behalf of carrier to a third party.

If an agent appears to be acting on behalf of a carrier and a third party reasonably believes it, then the carrier is liable for the agents actions. If an agents uses the letter head of a carrier and third party may reasonably believe that the agent has authority to act on behalf of the carrier even though they may not have it. .

2. Name and describe the different distribution systems.

A. Independent Agency: Usually has appointment with different carriers and can place the client with the carrier that provides the best service or rates. A main characteristic of an independent agency is that the agent owns the book of business or expiration list.

B. Exclusive Agency System: In Exclusive Agency system the agency/agent has a contract to sell insurance exclusively for one insurer or a group of related insurers. The agent is usually independent representative of the company and may or may not own the expiration list. They also may have to sell the expiration list to the carrier if the appointment is terminated.

C. Direct Writing System: In a direct system, the Insurance carrier uses employees to represent them. In this case, the Insurer owns the book of business and the agents as employees earn a wage and bonuses from the company. D. Alternative Distribution Channels: Alternative distribution channels generally do not rely on salespeople or agents. They are direct response, internet, call centers, group marketing and financial institutions. Direct response rely on mail, internet and phone contacts. Internet - Insured interacts/access the carrier through a website. Call center called prospects to obtain business Group Marketing Mass marketing, worksite and affinity marketing. Financial Institutions an agent can place a desk at a bank

3. What is the reason for unfair trade practice laws? Unfair practice laws are there to protect the consumer and maintain a healthy level of competition between insurance carriers. By prohibiting misrepresentation and false advertising, tie-in sales, rebating, and other deceptive practices regulators are making the industry honest and transparent which will benefit the consumer. By not allowing these practices, it eliminates some of the conflict of interest that arises by an agent representing the insured and the Insurance Company. .