What is an appointment in insurance terms?

• A. A legal document establishing a new insurance company.
• B. The authority given by an insurer to a licensee to transact insurance or adjust claims on behalf of the insurer.
• C. The process of appointing a broker.
• D. The cancellation of a policy.

Answer: (B)

An appointment in insurance terms is the authority an insurer grants to a licensed individual to act for the insurer in handling insurance transactions or adjusting claims. This relationship lets the licensee solicit, bind, issue policies, or adjust claims on behalf of the insurer within the agreed scope, such as specific lines of business or geographic areas. Without an appointment, a licensee cannot legally transact business for that insurer or represent them in claims handling. Appointments can be exclusive or non-exclusive and are typically documented in a contract or appointment letter, and they can be terminated or renewed, which ends or reinstates that authority. Understanding appointment helps clarify who a licensee can represent and what actions they are empowered to take for the insurer.