What is the process by which an insurer appoints an individual to act on its behalf called?

The process by which an insurer appoints an individual to act on its behalf is referred to as an agency contract. This contract establishes the legal relationship between the insurer (the principal) and the agent (the individual). The agent is granted certain authority to represent the insurer in various capacities, which may include negotiating terms of insurance, binding coverage, and issuing policies. The specifics of the authority granted can vary based on the terms of the agency contract, but the fundamental aspect is that it allows the agent to conduct business as a representative of the insurer.

In contrast, the other terms mentioned do not accurately describe this specific relationship. A policy agreement generally refers to the contract between the insurer and the insured outlining the terms of the coverage provided. An insurance mandate typically doesn’t capture the nuanced responsibilities and rights that come with agency relationships. A service arrangement could imply a broader spectrum of service provision that might not be exclusive to agency functions, making it less precise in this context.