How is a licensee's authority to represent an insurance company documented?

The authority of a licensee to represent an insurance company is documented through an appointment. This appointment serves as a formal agreement between the insurance company and the licensee, granting the licensee the right to act on behalf of the company in selling its insurance products or services. It is a critical piece of documentation that ensures the licensee is recognized by the insurance company as an official representative, allowing them to solicit business and interact with clients under the umbrella of the insurer’s legal framework.

In contrast, while a binder signifies an agreement of coverage between an insured and an insurer, it does not confer authority to a licensee. A certificate of authority refers to the official permission granted to an insurance company by the state to operate legally within that jurisdiction; it doesn’t directly relate to the authority of the licensee. A policy endorsement serves to modify the terms or coverage of an existing insurance policy and is not related to the representation authority of a licensee. Thus, the appointment is the precise instrument that documents the relationship and authority between the insurance company and the licensee.