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Mount Beacon Voluntary Producers Agreement

    Laura Pearce

This review 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

  • Agent's ownership of expirations is not definitive and may be undermined by MBMGA under several circumstances.
  • Authorizes MBMGA to directly solicit policyholders for supplemental coverages despite Agent's ownership of expirations.
  • Requires Agent to pay MBMGA's attorneys' fees if MBMGA sues to enforce the terms of the Agreement, but if the Agent sues to enforce the Agreement, MBMGA is not required to pay the Agent's attorneys' fees.

Provision-by-Provision Review

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

1. Representations and Warranties

A.b. Agent must represent that Agent's license has never been threatened to be suspended or the subject of a disciplinary proceeding, even if the Agent was never found to be at fault or subject to a consent order. Because the "Agent" is the agency executing the Agreement, it is not clear if this provision applies only to the agency license or to the license of every agent in the agency.

2. Authority

D.d. MBMGA has the authority to access and use expiration information as described in Section 6. (This is problematic. See my comments for Section 6).

3. Duties of Agent and MBMGA

A.i. Agent must agree to promptly notify MBMGA of any felony convictions, legal investigations, charges or actions taken against any producer in the agency, including actions of any government authority regulating insurance. What if the Agent (agency principal) is unaware of these actions, investigations or charges? It may be better to add language that says "if known or reasonably should have been known to the agency principal."

6. Expirations 

This section lists a number of instances in which MBMGA may contact or use a third party to contact the Agent's customers, despite the Agent's "ownership of expirations". Sub-paragraph a., to provide customer service to any such person, and sub-paragraph f., to provide information regarding insurance related issues, both seem to be extremely broad and in clear violation of the Agent's ownership of expirations. In addition, this section provides that MBMGA will own all rights to expiration information if MBMGA terminates the Agreement in accordance with Section 9 (see my comments for Section 9).

8. Indemnification 

The language in each indemnification clause appears to be fair and mutual. However, neither clause includes language that says indemnification is required "except to the extent caused or contributed to by the other party," which is common language in most of these clauses.

9. Termination 

A.e. This sub-paragraph allows MBMGA to terminate the Agreement immediately if it believes that the Agent has failed to promptly comply with any of its duties and obligations under the Agreement, yet the language does not give the Agent any appeal rights nor does it set forth any dispute resolution process. Also, termination by MBMGA under this section gives MBMGA ownership of expirations pursuant to Section 6.

H. The language in this subsection provides that the Agent will own expirations upon termination of the Agreement as long as all premiums and funds due to MBMGA are paid, yet the language does not give the Agent any appeal rights or a dispute resolution process. It also seems to conflict with the language in Section 6. 

12. Enforcement of Obligations

Provides that if MBMGA refers the Agreement to an attorney for enforcement, Agent agrees to pay MBMGA's attorneys' fees, yet MBMGA is not obligated to pay the Agent's attorneys' fees if the Agent retains an attorney to enforce the terms of the Agreement.

14. General Provisions

G. Allows MBMGA to mail or deliver to any policyholder offers or solicitations that would enable the policyholder to add supplemental coverages to their policy. This seems to contradict the Agent's ownership of expirations.

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 March 2016

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