What Does Agency Agreement Mean?
An agency agreement is a legally binding contract between a person or an organization (called the principal) and another person or organization (called the agent) where the former allows the latter to act on their behalf.
Insuranceopedia Explains Agency Agreement
Agency agreements happen when somebody hires an agent to make decisions for them. The one who hires specifies the responsibilities of, and the payment for, the agent. These are spelled out in a contract. This can refer, for example, to a person hiring a lawyer or a businessperson hiring an accountant.
In terms of insurance, an insurance company may hire an insurance agent or agency in a particular area to sell and market its products. The company will specify the important information in a contract, such as what products to sell or how much commission is paid for every product sold.