Relate Producers, Policies, and Legal Entities
Learning Objectives
After completing this unit, you’ll be able to:
- List and describe the different types of insurance agents.
- Explain the relationship between producers, policies, and legal entities.
- Describe appointments and how they relate to producers.
- Relate an insurer’s legal entities to authorized insurance lines.
Get to Know the Agents
An insurance agent, also referred to as a broker or insurance producer, is someone who sells insurance products to clients on behalf of an insurance company. The insurance data model provides flexibility to model direct, captive, and independent agents. A direct agent is typically a sales representative from the insurance company and sells their policies directly. A captive agent is a contract agent of an insurance company who sells the policies of only a single insurer. An independent agent is a contract agent as well, but sells policies from multiple insurers.
Match the agent type to its description here.
Multi-Agent Collaboration
With the insurance data model, multiple agents can collaborate on a single policy, in addition to the conventional one-policy-one-agent framework. Let’s see how this plays out in a couple of examples.
One-to-One
Cumulus Insurance sells policies through two agents: one captive agent and one independent. The following example illustrates the policy-to-agent relationship model for both agents in the Cumulus Insurance Org.
In the graphic, Marcello is an independent agent working for the MaxProtect agency. He sold Anna her life insurance policy (1). Marcello has a Contact (2) and Producer record (3). The MaxProtect agency holds a Partner Account (4) connected to Marcello’s Contact and Producer record. A producer can have multiple policies associated with them, but they can have only one Contact and one Account.
As an independent agent, Marcello is not only a part of the Cumulus Org, but he is also modeled in his own agency’s org. In the MaxProtect Org, Marcello has a User Contact record and a Producer record.
Kumiko is a captive agent. She sold Anna her car insurance policy (5). Kumiko has a User Contact record (6) and a Producer record (7). There is no partner account related to her Producer record.
Many-to-Many
The insurance data model supports many-to-many agent-policy relationships through Producer Policy Assignment. We keep our example simple here and consider only captive agents. But know that many-to-one agent-policy relationships support all agent types. A large commercial insurance policy from Cumulus typically requires a team of agents and service reps to work in tandem to manage the policy.
Notice in the diagram how three agents work on the same business insurance policy. Producer Policy Assignment serves as a junction object between the Insurance Policy and Producer records. Each Producer (1) can have multiple Producer Policy Assignment records (2), but each Producer Policy Assignment record can have only one Producer and one Insurance Policy (3).
To allow multiple agents to collaborate on a single policy, be sure to first enable the Producer Policy Assignment object. You unlock this object when you enable Let Multiple Producers Work on the Same Policy under Insurance Settings in Setup.
Agent Licenses and Appointments
In the United States, an insurance agent is an individual licensed by a state’s insurance department to sell insurance in that state. Other countries and regions have their own licensing frameworks. An agent must be licensed in the insurance category for which they wish to transact business.
[Alt text: MaxProtect agent with Cumulus Insurance Accident Line of Authority]
Ridhima Kapoor is a producer working for the MaxProtect agency, and she’s licensed for the Accident and Property lines of authority. Cumulus Insurance, however, appoints Ridhima to sell policies only in the accident line of authority.
Justus uses the Business License object (1) to model the licenses of Cumulus agents, including details such as License Class and Line of Authority.
Appointments is insurance industry jargon for an agreement between the insurer and an agent authorizing the agent to represent the insurer in the sale of its insurance products. Justus uses the Distributor Authorization object (2) to model appointments. Ridhima has a Producer Contact record (3) associated with multiple Business Licenses, an accident Distributor Authorization, and the MaxProtect Account.
The issuance of licenses and appointments are usually done for a line of authority such as Accident, Property, and Casualty. The Distributor Authorization object has a lookup to the Business License object to capture the license-appointment relationship for the MaxProtect agency account (4).
Legal Entities and Authorized Insurance Lines
Cumulus Life Insurance Company is a legal entity of Cumulus Insurance. Cumulus Life Insurance Company in turn appoints the agency MaxProtect to sell policies under the life insurance line.
Let’s work through this. Cumulus Life Insurance Company is a legal entity of Cumulus Insurance. The insurance data model has a specific Legal Entity object, and now Cumulus Life Insurance Company has a Legal Entity record (1). Cumulus Life Insurance Company is authorized to sell life and property insurance in the United States.
Authorized Insurance Line records (2) model the insurance lines that the insurer’s legal entities are authorized to sell. The Authorized Insurance Line has a lookup to the Legal Entity object, which captures the insurer’s legal entities or subsidiaries.
Cumulus Life Insurance Company appoints the agency MaxProtect to sell policies under the life insurance line. The MaxProtect agency has a Partner Account (4) and now has Distributor Authorization (3) for Life Insurance (5).
Well that covers the main agent and agency objects in the insurance data model and should give you a basic picture of the entities involved. Of course, this flexible data model fully supports more complex claim scenarios and accounts.