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AmCap Underwriters Agency Agreement


    Laura Pearce

This review exclusively focuses on major issues of concern to insurance agencies and does not address general contract issues or provisions of the contract that contain boilerplate language.

Items of Concern

  • Allows AmCap to solicit the Agency’s customers after termination of the Agreement and thus, eliminates the Agency’s ownership of its expirations
  • Allows AmCap to directly contact the Agency’s customers during the term of the Agreement which could lead to solicitation of the Agency’s customers and erosion of the Agency’s ownership of expirations
  • Allows AmCap to disclose non-public information regarding the Agency’s customers after a two year period following termination of the Agreement

Provision-by-Provision Review

Structure corresponds to the lettered and/or numbered paragraphs of the contract (PDF).

Article II, Authority; Administration

Paragraph 2.3: Authorizes AmCap to modify its underwriting guidelines at any time with written notice to the Agency, but doesn’t specify that the written notice be “advance” written notice of a certain number of days.

Paragraph 2.4(c): Requires that the Agency instruct its insured to report their claims directly to AmCap which could leave the Agency out of the loop regarding their insureds’ claims.

Paragraph 2.4(f): Requires the Agency’s E&O policy to meet AmCap’s guidelines, but doesn’t provide the guidelines.

Article III, Compensation

Paragraph 3.2: Authorizes AmCap to modify its Commission Schedule at any time upon notice to the Agency, and states that such notice shall be 30 days advance notice of a commission decrease, unless it is a decrease that results from a “termination of a promotion” or other “temporary commission decrease”. Those exceptions to the 30 day notice requirement are not adequately defined or explained.

Article IV, Term and Termination; Assignment

Paragraph 4.2(a): Specifies that the Agreement can be terminated by either party without cause with only 30 days’ notice.

Article V, Nonsolicitation

Paragraph 5.1: Provides that AmCap cannot solicit the Agency’s customers during the term of the Agreement and for a period of two years after termination of the Agreement. However, this two-year non-solicitation period following termination only applies if AmCap terminates the Agreement without cause. Therefore, it does not apply if AmCap terminates the Agreement for cause (or believes it is terminating for cause), nor does it apply if the Agency terminates the Agreement. This language completely eliminates the Agency’s ownership of its business/expirations following termination of the Agreement.

Paragraph 5.2: Authorizes AmCap to contact the Agency’s customers directly or use a third party to contact those customers directly in order to: provide customer service; process an agent of record change requested by the customer; request or verify information related to the customer’s coverage; change terms of a policy; or provide information regarding insurance related issues. All of these contacts could certainly lead to solicitation of those customers on the part of AmCap and therefore, it erodes the Agency’s ownership of expirations.

Article VII, Confidentiality

Paragraph 7.5: Authorizes AmCap to disclose non-public information regarding the Agency’s customers after a two-year period from termination of the Agreement.

Article IX, Indemnification

Paragraph 9.1: The indemnification language appears to be fair, equitable and mutual.

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