MARKETING OF INSURANCE SERVICES AGENCY APPROACH

In recent times the insurance business has been based on agency representation and relationship. The agent represents the principal in the sale of insurance policies and in forcing a contractual relationship between the principal and the client. According to Nwachukwu (1991), the following criteria will be considered in agency creation

1) The creation of agency. The relationship can be formulated either through written or oral communication or by conduct. When required to act under seal, the agent must be given a document to validate his authority. This gives the agent power of attorney to act on behalf of his client. It has also been

2) Capacity: only individual who have been proven capable can act as agents. Exceptional cases are made during his period of sanity. Also a company can take up the role of an agent for another party, even if its not in line with the business operation of the company.

The relationship that exists between the principals and agents is solely based on the resultant benefits.

Classification of the Power and Authority of the agent

1) Express Authority: in this situation, the authority and rules governing the relationship is clearly spelt out in writing, oral or by deed. The oral form might not cure handy when issues come up. Where the written authority might not be specific and this gives room for manipulation of the principal by the agent.

2) Implied Authority: this authority is based on the nature and requirements of the given assignment.

3) Ostensible Authority: this is when an agent on taking role appears to pose authority to act on behalf of the principal. This power can be derived when the principal stops such claims. For e.g an agent who negotiates the sale of a hotel for a principal. He can rightfully collect a deposit which is binding on the principal. In this instance a third party can cure the principal if they are deceived by agents who put up appearances.

4) Agent of Necessity: this authority as the name implies serves as a means of fore stalling imminent problems. The consent of the principal must be given in this situation. Also, there must be a justification therefore the use of this authority ( in the exercise of this power) the agent in exercising this power must act in the interest of the people and also have control of the principals property for e.g when an agent clears the principals foods at a wharf to avoid deterioration.

RATIFICATION

This comes into effect when a principal rectifies the contract of an agent, when he acts without authorization or excurse his authority.

The following must be in place for effective ratification

I. The agent should disclose his position status at the time of the contract.

II. The existence of the principal must be proven. A non existing company cannot be bound by the contract after ratification

III. The principal must known all the facts before ratification. Ratification based on false information is not binding the principal as bound once he sanctifies the action of the agent irrespective of the authority he acted on. For e.g a receptionist who makes an office purchase without authorization, the manager who ratifies the purchase becomes liable.

IV. The act must be legal for it to be ratified.

THE INSURANCE INTERMEDIARIES

The insurance brokers and agents are notably the intermediaries or middlemen, play a major role in the insurance industry. According to Osiegbu (1996,20) the following are the roles of these agents in the insurance industry.

I. The insurance agents: the general public can choose any coy or agent/brokers of their choice in the insurance business. the Nigeria law recognizes the agent as one into instigates a contract relationship between the principal and a third party. This role ends once the contract has been established. The broker and Agent are both regarded as agents according to the law. Legally the principal is responsible for the actions of the agents, when his actions are in accordance with the authority given to him. The agent can be on a cash or credit basis. In Nigeria, agents are appointed on a cash basis at the initial stage then subsequently advance to a credit agent, after proving his worth as a rule; the credit agent has more authority than the cash agent. The difference between the insurance agent and the broker is that the agent is not expected to have technical knowledge of the insurance business to thrive own case agent. The agent normally brings business from third parties to the principal. But this class of agent receives commission on his own insurance only and does not introduce business from owners. Legally, no buyer is compelled to use an agent or broker. Buyers are exception to this rule. No insurance business can be conducted without the registered Lloyds broker.

TYPES OF AGENTS

1. General Agent: the general agent is not restricted in his representative capacity to the principal. He represents his principal in all transactions to the best of his ability.

2. Special Agent: this agent is appointed for a singular purpose and his authority is confined to that area. For e.g a pool agent.

3. Mercantile Agent: this agent is authorized to engage in trading activities for profit

4. Factors: these agents are charged with the possession of goods for the purpose of sale .this agent can sell, receive purchase price on his own name, have general right on the goods but has no right to pledge the goods

5. Brokers: The broker functions like the factors differing only in his inability to sue in his own name and not having any Hein on the goods

6. Del credence Agent: This agent is employed for the sale of goods. He serves as a bondman to the manufacturers when the buyers don’t make payments.

7. Auctioneers: These agents sell goods or properties at auctions. He sustain the right to over-sale or under-sale and is not liable for his decisions. The market forces of supply and demand are determinants to his decision.

MARKETING OF INSURANCE PRODUCTS

The following agents and brokers sell most insurance policies in Nigeria.

Exclusive agents: They are employees who work in an insurance company, and they sell only company policies.

Independent agents: They are not employees of any insurance company, rather they are independent business owners who sell policies for different and several companies. Large business and some commercial organizations procure policies through agents or brokers. The brokers or agents are representatives of policy holders not insurance coy even then their commissions are paid by the insurance firms.

CONTRACTS MADE BY AN AGENT

According to Irukwu(1999:26) contracts made by agents are divided into the following categories:

1. Disclosed Principal: In this situation the agent introduces the third party to the principal, the principal can sue and be sued in a contract and also has all authority bestowed on him. It is of the view that the disclosure principal of the agent protects the third party. If an agent acts without authority, he will be held for damages as a breach of his implied authority. A clear example of warranty of authority is seen in the case of Vouring vs Tonybee. The defendant a solicitor was oblivious of the mental state of his client, who was insane and thus unable to enter into a contract. The solicitor was held liable in damages to the plaintiff cost since they were in breach of implied warrant. In a case of fraud by the agent, he will be held liable to action for damages for the tort of deceit.

2. Where the agent acted without naming his principal: Normally the disclosure of the principal is not compulsory so long as the third party knows he is an agent. He is still under-obligation as discussed in the case of Vouing vs Tonybee .

3. Undisclosed Principal: The agent in this case does not disclose his acting capacity under a principal; rather he acts on his own behalf. It is of a several view that the agent is under an obligation to reveal his principal to the third party, by establishing a relationship between his principal and third party.

LEGAL CONSIDERATIONS

Agents and brokers are both regarded as agents under the law. They establish a contractual relationship between their principal and a third party. They are expressly or implicitly accepted by these, they represent act on their behalf. A typical example of an implied authority is the case of Marfit vs Royal insurance 1892. An agent of Royal insurance company issued a temporary cover in behalf of his principal who refused to accept the proposal, unaware even that within this period, fire had occurred, thereby giving rise to claim. The insurers argued that the agent had no right to issue cover or sell policy on their behalf. But previous covers so issued or sold by the insurers. The agent had an implied authority to issue cover on behalf of the insurer who eventually paid the disputed claim.

When an agent may be sued: An agent may be sued when the following situation occurs

1. Executing a deed in his own name

2. Buying of written contract or bill of exchange without disclosing that he is acting as an agent.

3. When he claims to be an agent whereas he is the principal

4. When he contracts as an agent of a non-existing principal

5. When he claims to contract as an authorized agent when in actuality he does not have such authority.

6. Where it is customary for an agent to be bound by contracts.

7. Where the terms of the contract clearly states that the agent be bound personally.

TORT COMMITTED BY AN AGENT

Any tort committed by an agent in the process of selling insurance products authorized by the principal, where it is required that the principal be held liable for the actions of the agent. The principal will be held responsible. The agent also shares in the liability with the principal for any action deemed illegal.

The marketing activities of an agent to the principal are as follows:

1. Duty of care and skill: An agent should skillfully carry out his duty