How insurance is sold
MR. WATSON: The second part of this chapter, the distribution system, talks about how insurance gets from the company to the public.
- Agents - represent the company
- Brokers - represent the buyer
MR. WATSON: To protect the public, an agent represents the insurance company. The company is mostly liable for the agent's actions, as you shall see. Insurance can be quite complicated to some folks, they don't always know what questions to ask. Like with computers or whatever it is that I don't know about, which is anything outside of this class, it would be real easy to take advantage of my ignorance.
MR. WATSON: A broker represents the buyer. Now, let's say that I'm a broker. A broker represents the buyer. However, let's say I was a broker and I ripped you off. You are going to sue me. Do you agree? Suing me is like getting a beer out of an empty refrigerator. You are getting no compensation, nothing. So to protect the public from unscrupulous people with licenses, every licensed person in the state of Florida is an agent, an agent of the company. The agent and the company are considered to be one and the same.
MR. WATSON: If Mr. Cotton here, if he takes advantage of you, you are going to sue him -- do you agree?
STUDENTS: Yes.
MR. WATSON: And who else? His company.
MR. WATSON: Say I worked for Last Chance Insurance Company. If I ripped you off, it would be you on one side of the courtroom and me and Last Chance Insurance Company on the other side. The reason they do that is to protect the public. Because if Last Chance Insurance Company is going to be liable and on the hook for all this money, then they are going to make sure that I am trained. They are going to keep an eye over me.
MR. WATSON: So to protect the public, every licensed person is an agent. The agent represents the company. The agent and the company are one and the same. Does that make sense?
STUDENTS: Yes.