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Bankers Insurance Group Re-Contract 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

  • Provides that the Agency is ultimately responsible for paying the premium to the Company on all policies written under the Agreement, whether or not the premium is collected by the Agency, and is responsible, at its sole expense, for taking any action to collect such premiums.
  • Requires Agency to establish a premium account with a national bank, but does not allow for a state-chartered bank.
  • Provides for record retention requirements that may be more stringent than state law.
  • Provides that the Agency may lose ownership of expirations for prohibited offenses and/or misconduct of agency principals that is not well defined or does not rise to the level of a criminal offense related to the financial services business.
  • Indemnification provisions are not fair and mutual.  

Provision-by-Provision review

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

2. Employment of Producers

2.3. Requires Agency to warrant that it has done background checks and credit checks of all appointed Producers. Many agencies do not do this because they rely on the fact that a Producer has a current license issued by DFS. DFS does background checks and credit checks upon issuance of a license and is also required to be notified of criminal offenses committed by current licensees.

3. Premium Collection and Remittance

3.1.1 Requires Agency to establish a premium account with a "national" bank if the Company chooses not to direct bill. What if the Agency has an account with a state chartered bank instead?

3.2 Provides that the Agency is ultimately responsible for paying the premium to the Company on all policies written under the Agreement, whether or not the premium is collected by the Agency.  Also provides that the Agency is responsible, at its sole expense, for taking any action to collect premiums on policies written under the Agreement.

4. Commissions

4.4. Allows Company to unilaterally amend the commission schedule in its own discretion and with only 30 days notice to Agency.

5. System Access and License

5.2 Specifies that the Agreement does not transfer ownership rights to the Agency of any data in the Agency Portal and that Company reserves all rights. This could be interpreted to interfere with the Agency’s ownership of expirations.

7. Record Retention; Audit

7.1. Requires Agency to maintain all policy documents for 7 years, even if applicable laws provide for shorter retention periods.

8. Term and Termination; Suspension

8.2.3. Allows Company to immediately terminate the Agreement, cause the Agency to lose commissions (see 8.3.3) and cause the Agency to lose ownership of expirations (see 9.1) if any of the Agency’s principals engage in misconduct or a “prohibited offense".  Misconduct is not defined and a "prohibited offense" includes misdemeanors as well as felonies, some of which are not related to financial services offenses.

8.4. Allows Company to suspend Agency’s authority for any reason or for no reason.  This should be better defined.

9. Expirations

9.1. Provides Agency owns expirations unless the agreement is terminated by the Company for misconduct or a prohibited offense by the Agency or its Principals.  (See 8.2.3 above)

These provisions are troublesome because they do not specify that the Agency exclusively owns its expirations during the term of the Agreement and after termination, that the Agency’s work product is included in the expiration information owned by the Agency, or that the Company must use reasonable business judgment to sell the expirations if it acquires ownership of them. The Agency may want to request that these issues be addressed by using the language below in place of the current language:

The ownership, use, and control of expirations, including those on direct bill business, the records thereof, and the Agency's work product, shall remain in the undisputed and exclusive ownership and possession of the Agency, and the Company shall not use its records of those expirations or work product in any marketing method for the sale, service or renewal of any form of insurance coverage or other product/service which abridges the Agency's right of exclusive ownership, use, and control of the expirations or work product, nor shall the Company refer or communicate this expiration information or work product to any other party.

However, in the event of termination of this Agreement, if the Agency has not then properly accounted for and paid all premiums to the Company for which it is liable under this Agreement, the use and control of the Agency’s expirations, including all right, title, and interest in and to the records thereof, shall be vested in the Company as of the date of such termination. In the exercise of its right to collect any indebtedness due from the Agency through the ownership, use, and control of the Agency’s expirations or work product, the Company shall use reasonable business judgment in selling the expirations and shall be accountable to the Agency for all sums received which, net of expenses, exceed the amount of indebtedness. The Agency shall remain liable for the excess of the indebtedness over the sums received by the Company. Any indebtedness due from the Agency shall not prevent application of the ownership of expirations clause in favor of the Agency if the Agency furnishes collateral security acceptable to the Company in the amount of such indebtedness, to be held by the Company until the indebtedness is satisfied.

Nothing in this section shall interfere with the Company's obligation to renew policies that include contractual renewal guarantees or which must be renewed pursuant to state law, regulation or by order of government authority, and the Agency shall be entitled to receive commissions on such policies at the rate of commission in effect prior to the termination.

10. Confidentiality and Privacy; Nondisparagement

10.1. Requires Agency to comply with privacy laws but does not require Company to do so.

10.3. Requires Agency to refrain from disparaging the Company, but does not require the Company to do the same. 

12. Indemnification

12.1 and 12.2. The indemnification language is not mutual and identical for each party.  The cases in which the Company must indemnify the Agency are much more limited.  In addition, the Company is not required to indemnify the Agency if the Agency has contributed to the liability in any way.  However, the Agency must indemnify the Company even if the Company has contributed to the liability.  To be fair, the language should apply a comparative negligence standard and provide that: “indemnification is required, except to the extent the other party caused or contributed to the liability.”

15. Miscellaneous Provisions

15.8 Handwritten or typewritten changes to this Agreement are void under all circumstances.

FAIA’s Office of the General Counsel provides this contract review only for general information and comments. It is not intended to answer specific individual legal, business, or other questions. It was prepared solely for use as a guide, is not a substitute for the Agent’s/Agency’s independent evaluation of any provision in a contract, and is not a recommendation that the contract be signed, revised, or rejected.  Any communication you have with the Company regarding this contract should be an individual communication, and not on behalf of a group of agencies or through FAIA. If specific legal or other expert advice is required or desired, please seek the services of an appropriate, competent professional, such as a licensed Florida attorney familiar with the Florida Insurance Code.  


Reviewed July 2018

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