An insurance broker recommends and arranges a policy for his client and collects the premium on behalf of the insurer. At what point in this scenario is the insurer the broker's principal?

In this scenario, the insurer becomes the broker's principal at the moment the premium is collected. This is because the collection of the premium is a significant act that establishes the broker as an agent of the insurer. When the broker collects the premium, they are acting within their capacity to bind the insurer to the contract; the insurer is then obligated to provide coverage as agreed upon in the policy.

Until the premium is collected, the insurer has not yet committed to the risk associated with the policy. Recommendation and arrangement of the policy are preliminary steps that do not legally bind the insurer. Advising on how to make a claim pertains to post-transaction responsibilities and does not relate to the establishment of the broker's agency status. Thus, the action of collecting the premium serves as a definitive point at which the relationship between the broker and the insurer is solidified, confirming the insurer's role as the principal in the transaction.