Insurance in Agency Agreement
An agency contract is a legally binding contract between a person or organization (called a client) and another person or organization (called an agent) where the former allows the latter to act on their behalf. Although many agreements allow the Company to terminate the Agreement for any reason, the Committee believes that the Company should agree not to terminate the Agent based on the volume of business or the composition of the activities, unless the Company has previously informed the Agent in writing of its requirements. The Company should also give the Agent sufficient time to meet these requirements and should agree not to terminate the Agent if its insurance actions prevent the Agent from meeting the requirements. B. The name of the Agency shall be clearly visible on communications from the undertaking to the insured, in the greatest form of practical printing and, in any event, in printed form, no less than the largest communication used in the communication. The indemnification provision of a commercial agency contract is a clause that many agents only read after the fact; That is, they face a claim for error and injunction and then only turn to their agency contract to determine if the company will provide assistance. To paraphrase one of the IIAA`s TV commercials, it`s the wrong time to find out you don`t have the right compensation provision. The Independent Agent`s “Checklist for Agency-To-Company Agreements” was first published in 1978 as the “Guide to Agency-Corporation Agreements” and revised in 1981 and 1985. The Agency Contracting Committee of Independent Insurance Agents of America, Inc. decided it was time to take a fresh look at agency-company agreements, as this is a dynamic area where contractual terms change as new issues and conflicts arise in the agency-company relationship.
Companies uniformly require that the agent intend to sell, assign or transfer their agency, and the Panel recommends that notification be made where reasonably possible. Some companies require up to ninety (90) days` notice, which can actually affect or stop a proposed sale or acquisition, especially if the value of the business is affected by the company`s refusal to name the potential buyer. The “ownership of expiration dates” provision is often overlooked because agents assume they own the agreement they enter into with the companies. The agent`s ownership of its expiration conditions is the essence of the independent agency system. A well-constructed “ownership of operations” provision is crucial not only to preserve the agent`s independence and fairness in his business, but also to define the right boundaries between his clients and the company. The Committee remains strongly committed to the inclusion of an arbitration clause in all agency contracts. The inclusion of an arbitration clause is important to provide a fair and objective means of resolving disputes arising out of the contract. In short, it makes sense for the other protected and makes the contract work. It also encourages good faith efforts to resolve disputes to avoid arbitration and potential litigation. The following provision is recommended. As a result, the work of the Agency`s Contracts Committee continues. Through this guide and the contract seminars that the Officers` Committee is organizing across the country, the Committee continues its crusade to train officers, so that they will in turn ask their companies for fair agency agreements.
If the agency is a company, the company often includes a personal guarantee as part of the contract. A personal warranty usually indicates that the person signing the warranty is personally liable for the warranty. This could result in the signatory`s personal property being adjudicated against the Agency if the Agency does not pay for the judgment. It is recommended to completely remove the personal guarantee from the contract. If the agent represents a company without an arbitration clause in their agency contract, they must ask the company for written notice of its dispute resolution procedures. When the Guide was first published in 1978, only one of the re-examined agency contracts contained an arbitration clause. More and more companies are including arbitration clauses in their agency contracts. Since the Agent and the Company intend to ensure the stability of their relationship, this Agreement will remain in effect for a period of at least _____ consecutive years, beginning on January 1 each, unless terminated in accordance with the terms of this Agreement. Agency contracts have come a long way since the IIAA published the “Minimum Criteria for Updating Agency Contracts” in 1968.
Many contract protection measures that were unknown in those dark years are now hubs for most agency contracts. Despite this progress, the Committee continues to note two trends that continue to this day. Provision (A) is extremely important because it provides that decisions on direct accounting must be taken by mutual agreement between representatives and enterprises. .