Final answer:
The authority given to a producer by an insurer is defined in the Agency Agreement, which is a legal document setting the terms for the producer's actions on the insurer's behalf, unlike codes of ethics or underwriting guidelines.
Step-by-step explanation:
The authority given to the producer on behalf of the insurer is outlined in the Agency Agreement.
The Agency Agreement is a legal document that outlines the terms and conditions under which a producer (also known as an agent or broker) acts on behalf of an insurer. This agreement typically delineates the extent of the producer's authority, their responsibilities, and the procedures they must follow while representing the insurer. It is distinct from other documents such as a Code of Ethics, which governs professional conduct;
Underwriting Guidelines, which provide rules for assessing risks; and Claims Procedures, which detail the process for handling claims. The agency agreement therefore serves as a crucial element in the insurance business, legally binding the producer to act within the specified boundaries dictated by the insurer.