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Cpcu 530 review_terms chapters 7,8_homework Cpcu 530 review_terms chapters 7,8_homework Document Transcript

  • CPCU 530Business Law for InsuranceProfessionalsDonna M. Kesot, CPCUThe Institutes Chapters 7 & 8 Homework March 6, 2013 Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Agency Law & ApplicationsChapter 7
  • Agency Creation—Activities 2Agency CreationEducational Objective (EO)Explain how an agency relationship can be created by each of the following: Appointment Estoppel RatificationInstructionsReview the terms agency, agent, and principal and then proceed to Activity 1—Developing a Scenario to Explain the Creation of an Agency RelationshipActivity 1—Developing a Scenario to Explain the Creationof an Agency RelationshipGroup Activity Followed by Large Group DiscussionDivide participants into small groups and provide each group with a flipchart, ifpossible.Assign each group one of the following terms: Appointment Estoppel RatificationAsk the participants to develop a scenario in which their assigned situationcreates an agency relationship. Remind participants to define any key terms, asnecessary. Have the groups include as much detail as possible in theirexamples, whether real or fictional.Debrief:Ask each group to present their scenario to the class. Copyright Donna M. Kesot & American Institute For Chartered Property Casualty 2 Underwriters
  • Agent’s Authority—Activities 3Agent’s AuthorityEducational Objective (EO)Describe an agent’s authority in terms of the following: The scope of authority granted (actual or apparent) Third party’s duty to ascertain scope of authorityInstructionsActivity 1—Describing An Agent’s AuthorityPairs (or Small Group) Activity Followed by Large GroupDiscussionDivide participants into pairs (or small groups). Have the pairs/groups worktogether to complete the questions on the Activity 1—Describing An Agent’sAuthority worksheet.Alternative: This activity could be assigned as individual pre-work. If used asan assignment, participants should come prepared to share their answers.Reconvene the large group and ask for volunteers to share their responses.Debrief:Review the answers with the large group.Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Agent’s Authority—Activities 4Activity 1—Describing An Agent’s Authority Working in pairs or small groups, describe an agent’s authority. Describe the scope of an agent’s authority in terms of actual authority, express authority, and implied authority. Describe the key characteristics of apparent authority. Explain why a third person is not entitled to rely on an agent’s statements about the scope of the agent’s authority. Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Agent’s Authority—Activities 5Answers to Activity 1—Describing An Agent’s Authority Working in pairs or small groups, describe an agent’s authority. Describe the scope of an agent’s authority in terms of actual authority, express authority, and implied authority. Describe the key characteristics of apparent authority. Explain why a third person is not entitled to rely on an agent’s statements about the scope of the agent’s authority. Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Agent’s Duties and Remedies—Activities 6Agent’s Duties and RemediesEducational Objective (EO)Describe the principal-agent relationship in terms of the following: Duties an agent owes to the principal Remedies a principal has for an agent’s breach of duties Duties a principal owes to an agent Remedies an agent has for a principal’s breach of dutiesInstructionsActivity 1—Role Playing Agent’s and Principal’s Dutiesand RemediesPairs (or Small Group) Activity Followed by Large GroupDiscussionDivide participants into pairs (or small groups) and provide them with aflipchart. Ask one person to assume the role of agent and another assume therole of principal.Using the Activity 1—Role Playing Agent’s and Principal’s Duties andRemedies worksheet, have each role describe their duties to the other, and theremedies the other has if those duties are breached.Pairs or groups should have a scribe list their answers as they work througheach segment of the activity.Reconvene the large group and ask for volunteers to share the duties andremedies they have identified.Debrief:Review the answers with the large group. Ask participants for any further examples to illustratethe principal-agent relationship.Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Agent’s Duties and Remedies—Activities 7Activity 1—Role Playing Agent’s and Principal’s Duties and Remedies Working in pairs or small groups, describe the duties of your assigned role and the remedies available to the other in the event there is a breach of duty. Duties of the Agent Remedies Available to the Principal Duties of the Principal Remedies Available to the Agent Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Agent’s Duties and Remedies—Activities 8Answers to Activity 1—Role Playing Agent’s and Principal’s Duties and Remedies Working in pairs or small groups, describe the duties of your assigned role and the remedies available to the other in the event there is a breach of duty. Duties of the Agent Remedies Available to the Principal Loyalty Obedience Reasonable care Accounting Information Duties of the Principal Remedies Available to the Agent Agreed-on period of employment Compensation Reimbursement for expenses Indemnity for losses Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Agency Termination—Activities 9Agency TerminationEducational Objective (EO)Describe the various means by which parties can terminate agency relationships.InstructionsActivity 1—Describing the Termination of an AgencyRelationshipLarge Group Brainstorming ActivityLead the large group in a brainstorming session:First, ask for any of the various ways agencies can be legally terminated. Listall answers on a board or flipchart.Then, ask participants for as many examples as they can think of for eachanswer given.Debrief:Fill in any additional answers, if necessary. y Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Contractual Rights and Liabilities—Activities 10Contractual Rights and LiabilitiesEducational Objective (EO)Describe the potential contractual rights and liabilities of a principal and its agent interms of the following: A third party’s rights against a principal A principal’s rights against a third party An agent’s liability to a third party An agent’s rights against a third partyInstructionsActivity 1—Writing a Memo to Describe ContractualRights and LiabilitiesSmall Group (or Individual) Activity Followed by LargeGroup DiscussionHave participants work in small groups or on their own. Ask participants tocomplete Activity 1—Writing a Memo to Describe Contractual Rights andLiabilities.This can be a timed activity. Give each individual or group 5 minutes to writetheir description and prepare to share it with the class. Reconvene as a largegroup and ask for volunteers to summarize their memos with the group.Alternative: This activity could be assigned as individual pre-work. If used asan assignment, participants should come prepared to share their summary.Debrief:Discuss the points covered in each participant’s summary.Follow up question: What defenses are available for each party described? Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Contractual Rights and Liabilities—Activities 11Activity 1—Writing a Memo to Describe Contractual Rights andLiabilitiesAgency contract liability deals with situations in which parties to acontract fail to fulfill their obligations. When this occurs, the party thatsuffers a resulting loss has a right of recovery against the party in breach.Agency contract liability focuses on these respective rights: A third party’s rights against a principal A principal’s rights against a third party An agent’s liability to a third party An agent’s rights against a third partyA contract establishes rights and duties of the various parties to it.Write a brief memo describing the rights and liabilities listed above. Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Tort Liability of Principal and Agent—Activities 12Tort Liability of Principal and AgentEducational Objective (EO)Describe the potential tort liability of a principal and its agent in terms of the following: Respondeat superior liability of the principal for the agent’s torts Direct liability of the principal for the agent’s torts Principal’s liability for torts of independent contractors Principal’s liability for agent’s misrepresentations Agent’s liability for agent’s own tortsInstructionsActivity 1—Describing Tort Liability of Principal andAgentIndividual Activity Followed by Large Group DiscussionThe Activity 1—Describing Tort Liability of Principal and Agent worksheethas mismatched descriptions for the potential tort liability circumstances.Have participants rearrange the descriptions in the correct order.Note: This activity can be assigned as class pre-work.Debrief:Review the answers and check for understanding of the concepts, if necessary. Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Tort Liability of Principal and Agent—Activities 13Activity 1—Describing Tort Liability of Principal and AgentMatch the following circumstances on the left with the correct description on the right.Liability Circumstance DescriptionPrincipal’s liability for agent’smisrepresentationsRespondeat superior liabilityAgent’s liability for agent’s own tortsDirect liability Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Tort Liability of Principal and Agent—Activities 14Principal’s liability for torts of independentcontractors Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Tort Liability of Principal and Agent—Activities 15Answers to Activity 1—Describing Tort Liability of Principal andAgentMatch the following circumstances on the left with the correct description on the right.Liability Circumstance DescriptionPrincipal’s liability for agent’smisrepresentationsRespondeat superior liabilityAgent’s liability for agent’s own tortsDirect liability Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Tort Liability of Principal and Agent—Activities 16Principal’s liability for torts of independentcontractors Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Tort Liability of Principal and Agent—Activities 17 Chapter 8Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Insurance Producer Classifications—Activities 18Insurance Producer ClassificationsEducational Objective (EO)Describe the agency relationship that exists between insurers and each classification ofproducers: Agents BrokerInstructionsActivity 1—Defining Types of ProducersPairs (or Small Group) Activity Followed by Large GroupDiscussionDivide participants into pairs (or small groups) and provide each pair/groupwith a flipchart. Have the pairs work together to define types of producers inActivity 1—Defining Types of Producers.Debrief:Ask for volunteers to share each definition. Review the answers with the large group.Activity 2—Describing Agency Relationship BetweenInsurers and BrokersPairs (or Small Group) Activity Followed by Large GroupDiscussionRetain the pairs (or small groups) and provide each pair/group with a flipchart.Have the pairs/groups work together to complete the questions in Activity 2—Describing Agency Relationship Between Insurers and Brokers and recordtheir responses on their flip charts.Reconvene the large group and ask for volunteers to share their answers.Debrief:Review the answers with the large group.Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Insurance Producer Classifications—Activities 19Activity 1—Describing Types of Producers Define the following terms: Insurance agent General agent Special agent Soliciting agent Broker Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Insurance Producer Classifications—Activities 20Answers to Activity 1—Describing Types of Producers Define the following terms: Insurance agent General agent Special agent Soliciting agent Broker Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Insurance Producer Classifications—Activities 21Activity 2—Describing Agency Relationship Between Insurersand BrokersDescribe the authority of each type of agent presented and then note the activitiesthis type of agent conducts. General Agent Special Agent Soliciting AgentAuthority: Authority: Authority:Activities: Activities: Activities:Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Insurance Producer Classifications—Activities 22Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Insurance Producer Classifications—Activities 23Answers to Activity 2—Describing Agency Relationship BetweenInsurers and BrokersDescribe the authority of each type of agent presented and then note the activitiesthis type of agent conducts. General Agent Special Agent Soliciting AgentAuthority: Authority: Authority:Broad powers within Authority restricted by express Narrow authority derivedunderwriting guidelines agreement with insurer. directly from the agency contract•Activities: Activities: Activities: Solicits applications Induces third parties Solicits applications for insurance to apply for insurance for insurance Receives premiums Forwards applications Forwards applications Issues and renews to the insurer to the insurer policies Delivers policies to Appoints subagents the insureds on receipt Adjusts losses, in of premium some cases Possible additional duties, such as inspecting property, quoting rates, collecting premium payments, and assisting with changes in coverageCopyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Producers’ Authority—Activities 24Producers’ AuthorityEducational Objective (EO)Distinguish a producer’s actual authority, both express and implied, from apparentauthority.InstructionsActivity 1—Developing a Scenario to Distinguish Actualand Apparent Authority of ProducersGroup Activity Followed by Large Group DiscussionDivide participants into small groups. Assign each group either “actualauthority” or “apparent authority.”Have the groups develop a brief scenario to illustrate their assigned type ofauthority and explain how they distinguished it from the alternative. Forexample, one group may have been given express authority and need to contrastit with apparent authority. Participants should explain any key terms to thegroup, where appropriate.Debrief:Ask each group to present their scenario. Help participants compare and contrast the differenttypes of authority.Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Extent of Producers’ Authority—Activities 25Extent of Producers’ AuthorityEducational Objective (EO)Explain how the extent of a producer’s authority is affected by these factors: • Producers’ status as general agents, special agents, or brokers • Producers’ notice and knowledge • Producers’ authority to bind coverage • Appointment of subagentsInstructionsActivity 1—Explaining the Extent of the Producer’sAuthorityGroup Activity Followed by Large Group DiscussionDivide participants into small groups and provide each group with a flipchart.Assign the groups one or more of the following factors in the course materials: • Producers’ status as general agents, special agents, or brokers • Producers’ notice and knowledge • Producers’ authority to bind coverage • Appointment of subagentsAsk participants to discuss how their assigned factor impacts that producer’sauthority. Groups should prepare to give a brief explanation to the class.Debrief:When the groups are finished working on their discussion, call on each group in order todiscuss their assigned topic. Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Termination of Producer Authority—Activities 26Termination of Producer AuthorityEducational Objective (EO)Explain how producers’ authority can be terminated.InstructionsActivity 1—Explaining Termination of a ProducerLarge Group DiscussionLead a brief class discussion about how producers’ authority can be terminated.You may want to begin with asking participants the following questions: What are some of the way a producer/insurer relationship can be severed? How are the typical circumstances for termination communicated? How should the insurer avoid possible adverse consequences of their apparent authority after terminating an agency relationship? Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Producers’ Duties and Liabilities—Activities 27Producers’ Duties and LiabilitiesEducational Objective (EO)Describe producers’ duties and liabilities to insurance customers, third parties, andinsurers.InstructionsActivity 1—Describing Producers’ Duties and LiabilitiesGroup Activity Followed by Large Group DiscussionDivide participants into small groups and provide each group with a flipchart.Assign the groups one of the following points of view: Producers’ duties and liability to insurance customers Producers’ defenses to liability Producers’ duties and liability to third parties Producers’ duties to insurersAsk participants to use Activity 1—Describing Producers’ Duties andLiabilities to describe the key elements of their assigned topic(s) from thecourse materials.Debrief:When the groups are finished, call on each group in order to present their findings for theirassigned topics. You may want to compile all answers on a sheet and provide for participants,as a study aid. Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Producers’ Duties and Liabilities—Activities 28Activity 1—Describing Producers’ Duties and LiabilitiesLocate your assigned topic below and describe the elements listed.Producers’ duties and liability toinsurance customersDuty to follow instructionsDuty to procure insuranceDuty to maintain coverageDuty to place insurance with a solventinsurerDuty to advise Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Producers’ Duties and Liabilities—Activities 29Producers’ defenses to liabilityThe producer assumed no duty to thecustomer.The producer did not breach a duty to thecustomer.The insurance customer was partly atfault.The insurance customer failed to read thepolicy.Insurance was not available to thecustomer.Producers’ duties and liability tothird partiesExplain how under general contract lawprinciples, the parties to an agreementowe duties and obligations to each other,but not to third parties who might comein contact with either of them. Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Producers’ Duties and Liabilities—Activities 30Producers’ duties to insurersDuty to disclose risksDuty to follow instructionsDuties of loyalty and accountingDuty to transmit information properly Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters
  • Producers’ Duties and Liabilities—Activities 31Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters