Chapter 4 - Lesson 1

C4-L1-P5

Responsibilities to the Principal

The principal must select honest, loyal and hard-working producers to protect itself from potential liability. In return the principal gives the producer compensation for the business he or she brings in, as well as employment, and reimburses the producer for any damages or expenses incurred in defending against claims that the producer may be held liable for in the course of fulfilling agency obligations.

Perhaps the greatest source of ethical concern for many producers is the feeling that they are caught in the middle between two parties who have conflicting interests.

On the one hand, a producer’s primary responsibility is to serve the insurer. On the other hand, it is the consumer to whom the producer also owes dedication, loyalty, and service. Ethical behavior enables a producer to reconcile this conflict!