What is true about implied authority?

Implied authority refers to the ability of an insurance agent to perform actions that are necessary for the execution of their duties, even if those actions are not explicitly outlined in a formal agency agreement. This authority arises automatically from the nature of the agent's position and the reasonable expectations of the parties involved.

In practice, implied authority allows agents to engage in activities that support their role in the business, such as collecting premiums, issuing receipts, or making routine decisions regarding policyholder requests. The understanding is that these actions are essential for conducting business smoothly and efficiently without needing specific permission each time.

This differs from express authority, which is clearly stated within the agency agreement, delineating what the agent is explicitly allowed or required to do. While customer perception may play a role in how agents are viewed, it does not establish implied authority on its own, as this authority is specifically tied to the operational needs of the agency and the agent's designated responsibilities. Hence, the correct assertion about implied authority is that it enables agents to carry out necessary business operations, ensuring the effective functioning of the agency.