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. 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. Provision (B) is extremely important because it ensures that the name of the agency is clearly visible on all communications from the company to the insured. Without this protection, the agent`s relationship with the insured could be seriously compromised. The Board recommends that the agreements include specific language regarding the service information to which and the agent are entitled, both on an ongoing basis and in the event of termination. In addition, the agreement must clearly address the issue of the agent`s ownership of expiration periods before, during, and after the use of a service center. One area that is constantly controversial is that of payment procedures. Whether the company is billed directly or by the agency, the agreement must clearly specify the payment term and the method of payment. The written rehabilitation plan would not be included in the agency`s contract, as it would vary depending on the circumstances. However, all remediation agreements should include the following: Companies consistently require the agent to notify of the intention to sell, assign or transfer their agency, and the Panel recommends that such 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 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. If termination is unavoidable, certain guarantees should be included in the agency contract. There should be a provision that allows the agent to give written notice at least 180 days prior to termination, including the specific reasons for termination. In the event of termination, any renewal that occurs within one year of termination and that complies with applicable subscription standards must be renewed for at least one additional year at the commission rate and in accordance with the terms and conditions in effect before termination. This provision allows for a smooth transition of business activity after termination. This review of Edison Insurance Company`s full agency contract focuses only on important issues of concern to insurance agencies and does not address general contractual issues or contract provisions that contain standard language.
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 State Purchasing Division purchases insurance contracts for all state agencies pursuant to Section 287.022 of the Florida Laws. In addition, pursuant to Rule 60A-1.001(2)(h), Florida Administrative Code, “For the purposes of insurance contracts acquired under Section 287.022, FS, only state universities as described in Section 1000.21, F.S., are authorized users.” Fixed-term agreements with rotation functions add security and stability to the agent-company relationship, which benefits the insurance customer in terms of better and uninterrupted service. Such agreements would support both agents and companies in their mutual planning of activities. Whether the agent commits to a certain volume of business in exchange for a fixed-term contract is a question that must be negotiated between the agent and the company. On the one hand, the agent may not want to lock himself and his clients into a business, but on the other hand, it may be desirable for the company to be willing and able to provide a market for the agent. 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) recognizes that the Agreement is an agreement between two consenting parties and that, before the terms of the Agreement are amended, each negotiates in good faith with the other and agrees to amendments to be made. This provision clarifies what was implied – the duty of good faith imposed on each party to negotiate with the other on an individual basis. It is an important principle that the agent must ensure that it is written into his contract. We recommend including a provision that if the insurer is unable to issue a policy in a timely manner due to delays on the part of the insured or agency, the company will issue an estimated billable premium binder that will be credited to the officer`s account as if the policy had been received. If the delay was caused by the company, the estimated reward record would not be issued and payment would be made through the agent`s account that was up to date at the time the policy was issued. The Committee has long advocated contracts of a certain initial duration with rolling arrangements that can only be terminated by the company for a valid reason (e.g. B loss of licence). This type of agency contract resolves the critical weakness of most agency contracts today, namely the right of the company to terminate at will if it receives the specified notice period. 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. 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. If the agency is a company, the company often includes a personal guarantee as part of the contract.
A personal warranty usually states that the person signing the warranty is personally liable for the warranty. .
