Implied Authority: Life Insurance's Unspoken Rules

Implied authority is a term used in the insurance industry to describe the actions of an agent that may extend beyond the rights and powers explicitly provided in the agency contract. It is not actually expressed in writing or otherwise communicated, but it allows agents to perform all the usual and necessary tasks to sell and service an insurance policy. For example, if an agent regularly collects and remits premiums, and the insurer accepts this, the agent has implied authority to do so. This is distinct from express authority, which is a written agreement, and apparent authority, which arises when an agent's actions lead clients to believe they have authority to conduct business on behalf of the insurance company.

Implied authority is not explicitly communicated but allows agents to perform necessary tasks to sell insurance policies

Implied authority is not explicitly communicated but allows agents to perform the necessary tasks to sell insurance policies. It refers to the actions of an agent that may extend beyond the rights and powers explicitly provided in the agency contract. If these actions result in no response from the insurer, authority is extended as if these fall within the agency contract.

Implied authority is given by an insurance company to an agent and is not actually expressed in writing or otherwise communicated. This authority allows the agent to perform all the usual and necessary tasks to sell and service an insurance policy and to exercise the agent's expressed authority. For example, if the authority to collect and remit premiums is not expressly granted in the agency contract, but the agent does so on a regular basis and the insurer accepts, the agent has implied authority to do so.

Apparent authority arises when the agent's actions lead clients to believe they have authority to conduct business on behalf of the insurance company. Producers may function as agents, representing the insurance company. Agents are appointed by the insurer through a written agreement (contract) that outlines the agent's authority to represent the insurer.

Under contract law, implied authority figures have the ability to make a legally binding contract on behalf of another person or company. Implied authority is incidental to express authority since not every single detail of an agent's authority can be spelled out in the written contract.

Implied authority refers to the actions of an agent that may extend beyond the rights and powers explicitly provided in the agency contract

For example, if an agent collects and remits premiums, but this authority is not expressly granted in the agency contract, and the insurer accepts, the agent has implied authority to do so. Implied authority is incidental to express authority since not every single detail of an agent's authority can be spelled out in the written contract.

If an agent oversteps their express or implied authority, and the insurer does nothing to counter the public impression that such authority exists, then the agent has implied authority to perform these actions.

Apparent authority exists when an agent’s conduct causes a client or prospective insured to reasonably believe that the agent has the authority to sell an insurance policy or conduct business on behalf of the insurance company.

If the authority to collect and remit premiums is not expressly granted in the agency contract, but the agent does so and the insurer accepts, the agent has implied authority

Implied authority refers to an agent's ability to perform acts that are reasonably necessary to accomplish the purpose of an organisation. It is not expressly communicated or written into a contract, but it is assumed to allow the agent to transact the business for a principal.

In the context of life insurance, if the authority to collect and remit premiums is not expressly granted in the agency contract, but the agent does so and the insurer accepts, the agent has implied authority. This means that the agent has the jurisdiction to perform tasks that are reasonably necessary to sell and service an insurance policy, even if these tasks are not explicitly outlined in the contract.

For example, an agent may collect and remit premiums on a regular basis, and if the insurer accepts this, the agent has implied authority to do so. This is because the agent is performing a necessary task to sell and service an insurance policy, and the insurer has not taken any action to counter the impression that the agent has the authority to do so.

It is important to note that implied authority is incidental to express authority, as it is not possible to outline every single detail of an agent's authority in a written contract. However, if an agent's actions result in no response from the insurer, authority may be extended as if these actions fall within the agency contract.

Implied authority is incidental to express authority since not every single detail of an agent's authority can be spelled out in the written contract

Implied authority is a concept in insurance that refers to the actions of an agent that may extend beyond the rights and powers explicitly provided in the agency contract. It is incidental to express authority, which is a written agreement between the insurer and the producer. Express authority is typically found in a contract of employment and outlines the agent's authority to represent the insurer.

Implied authority is not explicitly communicated but allows agents to perform the necessary tasks to sell and service insurance policies. This includes collecting and remitting premiums, which may not be expressly granted in the agency contract but is assumed to be within the agent's jurisdiction if regularly performed and accepted by the insurer. Implied authority also allows agents to exercise their expressed authority and make legally binding contracts on behalf of another person or company.

The distinction between express and implied authority is important because it determines the scope of an agent's authority to act on behalf of an insurance company. While express authority is explicitly granted in the contract, implied authority arises from the agent's conduct and the insurer's inaction or acceptance of such conduct. This means that implied authority can extend beyond what is explicitly stated in the contract, as long as it is reasonably necessary to accomplish the purpose of the insurance company.

Overall, implied authority is incidental to express authority because it fills in the gaps of the written contract. Not every detail of an agent's authority can be spelled out, and implied authority allows agents to perform the usual and necessary tasks to sell and service insurance policies effectively.

Apparent authority exists when the agent’s conduct causes a client or prospective insured to reasonably believe that the agent has the authority to sell an insurance policy or conduct business on behalf of the insurance company

Implied authority refers to an agent with the jurisdiction to perform acts that are reasonably necessary to accomplish the purpose of an organisation. It is not explicitly communicated, but allows agents to perform all the usual and necessary tasks to sell and service an insurance policy.

Apparent authority exists when an agent's conduct causes a client or prospective insured to reasonably believe that the agent has the authority to sell an insurance policy or conduct business on behalf of the insurance company. This may include performing tasks that are not expressly granted in the agency contract, but that the agent does on a regular basis, such as collecting and remitting premiums. If the insurer accepts this, the agent has implied authority to do so.

Implied authority is incidental to express authority, as not every single detail of an agent's authority can be spelled out in a written contract. It is an authority that an agent is assumed to have in order to transact the business for a principal. Under contract law, implied authority figures have the ability to make a legally binding contract on behalf of another person or company.

If an agent's actions extend beyond the rights and powers explicitly provided in the agency contract, and there is no response from the insurer, authority is extended as if these actions fall within the contract.

Frequently asked questions