Cpcu 530 review_terms chapters 7,8_homework

Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters

CPCU 530 Business Law for Insurance Professionals

Donna M. Kesot, CPCU The Institutes

Chapters 7 & 8 Homework

March 6, 2013

Agency Law & Applications

Chapter 7

Agency Creation—Activities 3

Agency Creation

Educational Objective (EO)

Explain how an agency relationship can be created by each of the following: Appointment Estoppel Ratification

Instructions

Review the terms agency, agent, and principal and then proceed to Activity 1—Developing a Scenario to Explain the Creation of an Agency Relationship

Activity 1—Developing a Scenario to Explain the Creation

of an Agency Relationship

Group Activity Followed by Large Group Discussion

Divide participants into small groups and provide each group with a flipchart, if possible.

Assign each group one of the following terms:

Appointment Estoppel Ratification

Ask the participants to develop a scenario in which their assigned situation creates an agency relationship. Remind participants to define any key terms, as necessary. Have the groups include as much detail as possible in their examples, whether real or fictional.

Debrief:Ask each group to present their scenario to the class.

3 Copyright Donna M. Kesot & American Institute For Chartered Property Casualty Underwriters

Agent’s Authority—Activities 4

Agent’s Authority


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 authority

Instructions

Activity 1—Describing An Agent’s Authority

Pairs (or Small Group) Activity Followed by Large Group

Discussion

Divide participants into pairs (or small groups). Have the pairs/groups work together to complete the questions on the Activity 1—Describing An Agent’s Authority worksheet.

Alternative: This activity could be assigned as individual pre-work. If used as an 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.



Activity 1—Describing An Agent’s AuthorityWorking 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.



Answers to Activity 1—Describing An Agent’s AuthorityWorking 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.


Agent’s Duties and Remedies—Activities 7

Agent’s Duties and Remedies


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 duties

Instructions

Activity 1—Role Playing Agent’s and Principal’s Duties

and Remedies


Discussion

Divide participants into pairs (or small groups) and provide them with a flipchart. Ask one person to assume the role of agent and another assume the role of principal.

Using the Activity 1—Role Playing Agent’s and Principal’s Duties and Remedies worksheet, have each role describe their duties to the other, and the remedies the other has if those duties are breached.

Pairs or groups should have a scribe list their answers as they work through each segment of the activity.

Reconvene the large group and ask for volunteers to share the duties and remedies they have identified.

Debrief:Review the answers with the large group. Ask participants for any further examples to illustrate the principal-agent relationship.



Activity 1—Role Playing Agent’s and Principal’s Duties and RemediesWorking 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



Answers to Activity 1—Role Playing Agent’s and Principal’s Duties and RemediesWorking 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

LoyaltyObedienceReasonable careAccountingInformation

Duties of the Principal Remedies Available to the Agent

Agreed-on period of employmentCompensationReimbursement for expensesIndemnity for losses


Agency Termination—Activities 10

Agency Termination


Describe the various means by which parties can terminate agency relationships.

Instructions

Activity 1—Describing the Termination of an Agency

Relationship

Large Group Brainstorming Activity

Lead the large group in a brainstorming session:

First, ask for any of the various ways agencies can be legally terminated. List all answers on a board or flipchart.

Then, ask participants for as many examples as they can think of for each answer given.

Debrief:

Fill in any additional answers, if necessary.

y


Contractual Rights and Liabilities—Activities 11

Contractual Rights and Liabilities


Describe the potential contractual rights and liabilities of a principal and its agent in terms 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 party

Instructions

Activity 1—Writing a Memo to Describe Contractual

Rights and Liabilities

Small Group (or Individual) Activity Followed by Large

Group Discussion

Have participants work in small groups or on their own. Ask participants to complete Activity 1—Writing a Memo to Describe Contractual Rights and Liabilities.

This can be a timed activity. Give each individual or group 5 minutes to write their description and prepare to share it with the class. Reconvene as a large group and ask for volunteers to summarize their memos with the group.

Alternative: This activity could be assigned as individual pre-work. If used as an 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?


Contractual Rights and Liabilities—Activities 12

Activity 1—Writing a Memo to Describe Contractual Rights and LiabilitiesAgency contract liability deals with situations in which parties to a contract fail to fulfill their obligations. When this occurs, the party that suffers 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 party

A contract establishes rights and duties of the various parties to it.

Write a brief memo describing the rights and liabilities listed above.


Tort Liability of Principal and Agent—Activities 13

Tort Liability of Principal and Agent


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 torts

Instructions

Activity 1—Describing Tort Liability of Principal and

Agent

Individual Activity Followed by Large Group Discussion

The Activity 1—Describing Tort Liability of Principal and Agent worksheet has 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.



Activity 1—Describing Tort Liability of Principal and Agent

Match the following circumstances on the left with the correct description on the right.

Liability Circumstance Description

Principal’s liability for agent’s misrepresentations

Respondeat superior liability

Agent’s liability for agent’s own torts

Direct liability



Principal’s liability for torts of independent contractors



Answers to Activity 1—Describing Tort Liability of Principal and

Agent

Match the following circumstances on the left with the correct description on the right.

Liability Circumstance Description

Principal’s liability for agent’s misrepresentations

Respondeat superior liability

Agent’s liability for agent’s own torts

Direct liability



Principal’s liability for torts of independent contractors



Chapter 8


Insurance Producer Classifications—Activities 19

Insurance Producer Classifications


Describe the agency relationship that exists between insurers and each classification of producers:

Agents Broker

Instructions

Activity 1—Defining Types of Producers


Discussion

Divide participants into pairs (or small groups) and provide each pair/group with a flipchart. Have the pairs work together to define types of producers in Activity 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 Between

Insurers and Brokers


Discussion

Retain 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 record their 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.



Activity 1—Describing Types of ProducersDefine the following terms:Insurance agent

General agent

Special agent

Soliciting agent

Broker



Answers to Activity 1—Describing Types of ProducersDefine the following terms:Insurance agent

General agent

Special agent

Soliciting agent

Broker



Activity 2—Describing Agency Relationship Between Insurers

and Brokers

Describe the authority of each type of agent presented and then note the activities this type of agent conducts.

General Agent Special Agent Soliciting Agent

Authority: Authority: Authority:

Activities: Activities: Activities:





Answers to Activity 2—Describing Agency Relationship Between

Insurers and Brokers

Describe the authority of each type of agent presented and then note the activities this type of agent conducts.

General Agent Special Agent Soliciting Agent

Authority:

Broad powers within underwriting guidelines

Authority:

Authority restricted by express agreement with insurer.

Authority:

Narrow authority derived directly from the agency contract•

Activities:

Solicits applications for insurance

Receives premiums Issues and renews

policies Appoints subagents Adjusts losses, in

some cases

Activities:

Induces third parties to apply for insurance

Forwards applications to the insurer

Delivers policies to the insureds on receipt of premium

Possible additional duties, such as inspecting property, quoting rates, collecting premium payments, and assisting with changes in coverage

Activities:

Solicits applications for insurance

Forwards applications to the insurer


Producers’ Authority—Activities 25

Producers’ Authority


Distinguish a producer’s actual authority, both express and implied, from apparent authority.

Instructions

Activity 1—Developing a Scenario to Distinguish Actual

and Apparent Authority of Producers


Divide participants into small groups. Assign each group either “actual authority” or “apparent authority.”

Have the groups develop a brief scenario to illustrate their assigned type of authority and explain how they distinguished it from the alternative. For example, one group may have been given express authority and need to contrast it with apparent authority. Participants should explain any key terms to the group, where appropriate.

Debrief:Ask each group to present their scenario. Help participants compare and contrast the different types of authority.


Extent of Producers’ Authority—Activities 26

Extent of Producers’ Authority


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 subagents

Instructions

Activity 1—Explaining the Extent of the Producer’s

Authority


Divide 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 subagents

Ask participants to discuss how their assigned factor impacts that producer’s authority. 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 to discuss their assigned topic.


Termination of Producer Authority—Activities 27

Termination of Producer Authority


Explain how producers’ authority can be terminated.

Instructions

Activity 1—Explaining Termination of a Producer

Large Group Discussion

Lead 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?


Producers’ Duties and Liabilities—Activities 28

Producers’ Duties and Liabilities


Describe producers’ duties and liabilities to insurance customers, third parties, and insurers.

Instructions

Activity 1—Describing Producers’ Duties and Liabilities


Divide 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 insurers

Ask participants to use Activity 1—Describing Producers’ Duties and Liabilities to describe the key elements of their assigned topic(s) from the course materials.

Debrief:When the groups are finished, call on each group in order to present their findings for their assigned topics. You may want to compile all answers on a sheet and provide for participants, as a study aid.



Activity 1—Describing Producers’ Duties and Liabilities

Locate your assigned topic below and describe the elements listed.

Producers’ duties and liability to insurance customers

Duty to follow instructions

Duty to procure insurance

Duty to maintain coverage

Duty to place insurance with a solvent insurer

Duty to advise



Producers’ defenses to liability

The producer assumed no duty to the customer.

The producer did not breach a duty to the customer.

The insurance customer was partly at fault.

The insurance customer failed to read the policy.

Insurance was not available to the customer.

Producers’ duties and liability to third parties

Explain how under general contract law principles, the parties to an agreement owe duties and obligations to each other, but not to third parties who might come in contact with either of them.



Producers’ duties to insurers

Duty to disclose risks

Duty to follow instructions

Duties of loyalty and accounting

Duty to transmit information properly




Documents

Cpcu 530 review_terms chapters 7,8_homework