What is the term for the situation where an agent has the power to act on behalf of another party in dealings with third parties?

The term for the situation where an agent has the power to act on behalf of another party in dealings with third parties is agency. In the context of insurance, an agency relationship is established when an agent is authorized to represent an insurer or a client in transactions. This relationship empowers the agent to engage with third parties effectively, creating binding agreements and making decisions that impact the principal's interests.

Agency encompasses the rights and responsibilities shared between the agent and the principal, including the duty to act in the best interest of the principal and to adhere to the scope of authority granted. Within this framework, the agent acts as a bridge between the principal (such as an insurance company) and external parties (like clients or other insurers), thus fulfilling critical operational and transactional roles.

The other terms, while related to the roles agents play, do not capture this specific relationship as precisely as agency does. Authority refers more broadly to the power that an agent has, representation speaks to how the agent portrays the interests of the principal, and delegation involves transferring responsibility or power to another person but does not necessarily imply an established relationship like agency does.