What is it called when authority is given to a licensee to transact insurance?

The term that describes the authority conferred upon a licensee to transact insurance is "appointment." This process involves an insurer formally designating a licensed agent as one of its representatives, thereby allowing the agent to act on behalf of the insurer in their dealings with the public.

When an insurer appoints an agent, it establishes a legal relationship that outlines the agent’s ability to sell policies, collect premiums, and assist clients in managing their insurance needs directly for that specific insurance company. This relationship is crucial since it governs how the agent can operate within the insurance market and ensures compliance with regulatory requirements.

The alternative terms provided do not specifically refer to this formal arrangement. Licensing refers broadly to the process of acquiring a license to sell insurance; authorization commonly applies to granting permission but lacks the specificity tied to an insurance transaction; certification often implies a qualification or completion of a program rather than the formal authority to transact insurance on behalf of an insurer. Therefore, "appointment" is the most accurate term in this context.