IA&B, agency win landmark agency termination case
De facto termination recognized
Contact:
Karen Robison
(717) 795-9100 Ext. 606
Dec. 10, 2009 – The Pennsylvania Insurance Department has rendered a decision in an agency termination case, recognizing for the first time the concept of de facto terminations.
“This ruling is a vital win for the independent agent community,” said Norm Basso, chairman of the Insurance Agents & Brokers (IA&B) of Pennsylvania. “This case was necessary to defend the law, the rights of agents and the dignity of the agency-company relationship. I’m pleased that the Department recognized this need.”
The case focused on Everett Cash Mutual (ECM) eliminating all commission payments to an agency. The carrier never offered any protections afforded by Pennsylvania’s agency termination statute (Act 143), namely a one-year rehabilitation period or a one-year run-off period.
IA&B represented the agency involved in this case and also intervened as a party to the case to protect the rights of its 1,250 members in the state. IA&B argued that the complete elimination of commission to the agency in essence created a termination, as an agency cannot operate under those conditions. By allowing a company to act in this way, it would defeat the purpose of the termination statute, thereby rendering it useless.
“It is beyond debate that insurance agents expect and intend to be paid for their efforts, and that companies expect and intend the same,” stated the Insurance Department in its decision. “Total elimination of [the agent’s] commissions by ECM represented … intolerable working conditions for the agency and elimination of the contract’s essence. Accordingly, it constituted a de facto termination of the contract.”
- ### -
About Insurance Agents & Brokers of Pennsylvania
Insurance Agents & Brokers of Pennsylvania delivers preeminent programs, products and services to approximately 1,250 member agencies. Led by dedicated agent volunteers and staffed by 40 professionals, IA&B is recognized and respected nationally for its industry-leading efforts in agent professional development, advocacy, industry information and knowledge base, communications and more. IA&B is affiliated with the National Association of Professional Insurance Agents and the Independent Insurance Agents & Brokers of America.
For more information, visit www.iabgroup.com.
|
