In the agent/insurer relationship, who is considered the principal?

In the context of the agent/insurer relationship, the insurer is considered the principal. This designation arises because the insurer is the entity that creates and offers insurance policies, and it delegates authority to agents to act on its behalf. Agents are generally tasked with soliciting applications for insurance, issuing policies, and handling customer service issues tied to the policies issued under the insurer’s name. Therefore, in this professional relationship, the insurer, as the principal, is responsible for the obligations under the contract of insurance and provides the authority for agents to operate within the framework of its guidelines and policies.

The agent acts as a representative of the insurer but does not carry the same level of authority or responsibility as the principal. The policyholder is the individual or entity purchasing the insurance, and the broker typically operates independently to facilitate insurance transactions for clients, rather than acting as an official representative of a specific insurer. Thus, the correct identification of the insurer as the principal clarifies the dynamic and responsibilities within the insurance relationship.