In the producer/insurer relationship, what document outlines what an agent can and cannot do?

The agency contract is the document that clearly delineates the expectations, responsibilities, and limitations of the relationship between the producer (agent) and the insurer. This contract establishes the authority granted to the agent, the scope of activities they are allowed to undertake, and the obligations they have toward both the insurer and the policyholders.

The agency contract is fundamental because it defines the contractual obligations and rights of the agent, ensuring that both parties understand the framework within which the agent operates. This includes details such as the types of insurance products the agent is authorized to sell, the commission structure, compliance requirements, and procedures for reporting claims and managing policies. Because of its comprehensive nature, the agency contract serves as a critical reference point for both agents and insurers in managing their relationship.

Other documents like the insurance agreement typically outline the terms of coverage for the policyholders rather than the operational parameters of the agent's activities. A producer's policy might refer to specific guidelines for individual agents but does not have the authoritative structure of an agency contract. A service agreement usually pertains to general service provisions rather than explicitly detailing the authority and limitations of the agent in relation to the insurer. Thus, the agency contract is key to understanding the boundaries and powers within the producer/insurer relationship.