Consider pushing back on provisions that impose data security requirements more stringent than the requirements applicable by law , and consider pushing back on provisions that are not mutual and impose burdens and obligations on the agency without requiring the same of the carrier . The agency should also be aware of any contractual provisions requiring the agency to distribute privacy notices on the carrier ’ s behalf or take on other duties or responsibilities that are not mutual . •
CARRIERS TO INSUREDS
Be aware of any language that allows the carrier to communicate directly with , or sell directly to , the agency ’ s clients . If the carrier insists on including such language , the agency may want to request language that confirms that the carrier provides advance written notice of direct communications with clients , copy and / or identify the agency ’ s name and contact information on all correspondence and direct policyholders to the agency for questions and requests for service ; the carrier will pay commissions on any direct sales by the carrier to the agency ’ s clients ; and direct sales will not erode or in any way adversely affect the agency ’ s ownership of expirations .
CLAIMS REPORTING
Claims reporting requirements can differ significantly between carriers . Some may simply require notification of actual lawsuits filed against a policyholder . Others may require notice of any circumstance that may increase the carrier ’ s risk of any potential claim mentioned by a policyholder to the agency . Agencies may wish to limit such provisions to actual notification of a claim or lawsuit . Otherwise , the agency might arguably be agreeing to notify the company of every client complaint , no matter how minor .
POST-TERMINATION RIGHTS
Agency and carrier business needs and circumstances change over time , and relationships inevitably will come to an end . Some contracts , however , fail to address what happens next and agencies need to consider their rights and responsibilities after a termination notice .
Important language includes provisions relating to the payment of commissions on policies that continue after termination ; the agency ’ s ongoing access to its clients ’ records , including any records in the carrier ’ s database ; the authority to service policies after termination ; and their clients ’ renewal rights upon policy expiration .
Appointment contracts often permit carriers to cancel all policies as soon as permitted by applicable law . A run-off provision provides agencies and insureds with greater certainty following contract termination .
A run-off provision should provide a period of time , such as one year , after termination during which the carrier agrees to renew all policies that meet current underwriting standards and should specifically state that the agency has the authority to service policies following the termination of the contract and to receive commissions at a pre-determined rate , such as the rate in place at the time of the notice of termination .
Also , be aware of provisions that require the agency to service policies but do not require the carrier to pay commissions unless provided by law and language that allows the company to engage in selective cancellation without regard to its current underwriting standards , which may undermine the effect of the run-off provision .
DATA SECURITY
Data security regulation is developing quickly in the U . S . New York has enacted one of the nation ’ s most far-reaching laws ; the National Association of Insurance Commissioners ( NAIC ) has issued a model data security law , which a number of states are beginning to implement ; and carriers are amending or revising their agency contracts to address these new laws and regulations .
Consider pushing back on provisions that impose data security requirements more stringent than the requirements applicable by law , and consider pushing back on provisions that are not mutual and impose burdens and obligations on the agency without requiring the same of the carrier . The agency should also be aware of any contractual provisions requiring the agency to distribute privacy notices on the carrier ’ s behalf or take on other duties or responsibilities that are not mutual . •
Scott Kneeland is Big “ I ” general counsel and Eric Lipton is Big “ I ” senior counsel .