What is a central duty an agent owes to an insured or applicant for insurance?

A central duty an agent owes to an insured or applicant for insurance is to provide the agreed-on policies with a solvent insurer. This responsibility underscores the importance of ensuring that the insurance products offered are not only suitable for the client's needs but also reliable in terms of the insurer's financial stability. A solvent insurer has the financial resources to meet its claims obligations, which is crucial for the insured's peace of mind and protection against potential losses.

When an agent presents policies to clients, they must conduct due diligence to ensure that the policies are backed by insurers that are in good financial standing. This trust is fundamental in the insurance relationship, as clients rely on agents to guide them in making informed decisions about their coverage. In essence, this duty helps safeguard the interests of the insured or applicant.

Other choices relate to aspects of agency work but do not encapsulate the primary obligation agents have towards their clients concerning the reliability of insurance products. For instance, accepting all policy referrals is not necessarily a duty but rather part of the business strategy, minimizing claims costs focuses more on loss control rather than client representation, and increasing sales volume, while important for business growth, does not directly serve the best interests of the insured.