More insurance basics! This time written in script format. Have fun learning!

Producers and General Rules of Agency

Big Hero 6 plus Tadashi return from their break. Baymax waits for them all to sit down before continuing his lesson.

BAYMAX: I hope that your break was fun and helpful. As we all know, for some unexplained reason, our overlord Katie bought socks and groceries during our break. She clearly needs direction in her life. Now on with the lesson. An insurer, as principal, by the definition of the Law of Agency, states that the actions of the agent or broker are taken to be the actions of the principal. A broker or agent is first and foremost responsible to an insurer.

TADASHI: So basically an agent is responsible for the company's image?

BAYMAX: Essentially. Moving on, an agent or producer will always represent an insurer (company). The agent or producer solicits and negotiates insurance contracts on behalf of an insurance company. When an agent accepts a premium from a policy owner, it is the same as payment being given to an insurer.

TADASHI: So it's pretty much the same thing you've been saying. The agent represents the company and they have to inform the purchaser of everything to do with that insurer.

BAYMAX: Yes. There are three types of authorities granted to agents of producers. The first is Express Authority, which is an explicit, definite agreement an insurer grants to a producer. This is a binding authority that is in the form of a written contract, which gives the producer permission to represent their company.

HIRO: So... Express Authority pretty much means that a company creates a contract with an agent giving them authority? Even if they're wrong about something?

BAYMAX: Correct. Implied Authority is not formally communicated but it is assumed by the agent to transact businesses on behalf of the insurance company. It is the ability to act outside of the authority granted in an agency agreement and it extends to the company's liability. It is also the authority that is influenced by the expressed authority of an agent but is not written.

WASABI: So... authority that isn't written but is assumed by the purchaser because they assume the agent has training and knows what they're saying?

BAYMAX: In a way. It is implied that there was training. Apparent Authority exists when an agent uses materials that represent the company. Another example is when an agent accepts an insured's premium after the end of a grace period. Even though an agent does not have the power to accept their premium, it appears to the client that the agent has the authority to prevent their policy from lapsing.

HIRO: So... it's a tactic that makes the agent look more powerful than they are?

BAYMAX: Yes. Since the agent is trained and works for a company, purchasers assume that she will have more authority if she conducts herself in a way that implies that, such as using company materials like business cards. Now what is a Fiduciary?

There is a long, awkward silence.

BAYMAX: I see you are confused. A fiduciary is an agent who handles insurer funds in a trust capacity. The agent or producer must promptly collect and account for all premiums. An agent always protects the interest of an insured by following a Code of Ethics.

WASABI: Okay, slow down. So a fiduciary is an agent who handles the funds?

BAYMAX: That is correct.

WASABI: And they have to follow a Code of Ethics to make sure it's all an honest transaction.

BAYMAX: Also correct. This ends lesson 3.

GOGO: Wow. I thought something weird was going to happen.

HIRO: Me too.

TADASHI: Okay, I'm going to answer your question about how I came back to life.

Everyone leans in.

TADASHI: I'm not actually Tadashi Hamada. I'm Sam Beckett. I leaped into this body to prevent myself from dying and somehow there was a weird time paradox in which I both died and didn't die. Except now I'm about to leap out. So farewell everyone.

HONEY: ...what?

FRED: AWESOME! Though isn't that reference a bit obscure for this readership?

TADASHI: Wow, I feel weird. How did I get here?

HIRO: You're alive!

TADASHI: So I am. I'm also hungry. Pizza anyone?

BAYMAX: Perhaps a break for pizza would be warranted.

This is what happens when I start watching obscure 80s/90s science/historical fiction at nearly midnight. For the record, Quantum Leap is a really good show and one of the episodes gave me a Growing Up Haddock idea. So there! Oh boy!

~KateMarie999