Legal Relationship Between Insurer and Insurance Agent

Insurance Laws Amendment, 2014 & Guidelines on Appointment of Insurance Agents of IRDA, 2015. The following is the relationship between Insurer and Insurance Agent:-

 The insurer shall be responsible for all acts and omissions of its agents including violation of code of conduct specified under these guidelines, and shall be liable to a penalty which may extend to one crore rupees.

Also it states, Any person who acts as an insurance agent in contravention of the provisions of this Act shall be liable to a penalty which may extend to ten thousand rupees and any insurer or any person acting on behalf of an insurer, who appoints any person as an insurance agent not permitted to act as such or transact any insurance business in India through any such person shall be liable to penalty which may extend to one crore rupees.

Legal Relation Between Them:-

Thus they are bounded by a contract of agency. They are principal and agents. But agents are not brokers. Brokers are different. They are the agents of the client and not the insurer. So all requisites of an agency are to be complied with in addition to the regulation made by IRDA or Insurance Act.

As a common corollary it can be said that if insurance agents commits fraud in the ambit of his apparent authority, then one needs to say that insurer will also be liable. It is a old maxim "Qui facit per alium facit per se", meaning if any one does an act through other only he is responsible.