An appointment represents a contractual agreement between an insurance company and a licensed agent to sell insurance products for companies with which they are appointed. While the contractual agreement primarily governs the relationship between the agency and carrier, there are certain statutory protections established for this relationship. In this guide, we review the key contractual and statutory provisions governing the carrier agent relationship.
Listed below, we provide you with a clear roadmap on how to navigate this situation effectively. During these challenging times, with rising premiums in a hard market, independent insurance agents are more important than ever. The change in the market has many agencies faced with similar situations, and below are some of the takeaways learned:
Understand your book of business
- Have reports run on all carriers
- Revisit the make-up of the businesses and personal lines
- Run reports on claims and loss runs
Utilize your Trusted Choice Toolkit
- Implement templates that can now assist in pre-signed letters
Have a communication plan in your office
- Ensure each person is aware of the process
Understand all your carriers
- Consider strengths and weaknesses
- Examine underwriting requirements
- Determine market appetites and review which carriers have longevity
When you receive notice that your insurance carrier is canceling your contract, acting promptly and strategically is essential. Here’s a step-by-step guide on what to do first:
- Review the Cancellation Notice
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- Understand the Reason: It’s crucial to read the cancellation notice thoroughly to grasp why the contract is being terminated. Understanding whether due to non-compliance with terms, low performance, or changes in the carrier’s strategy will empower you to make informed decisions and take control of the situation.
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- Effective Date: Note the effective date of the cancellation to understand how much time you have to respond and make necessary arrangements.
- Contact the Carrier
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- Clarify Details: Contact your carrier representative or the carrier’s support team to clarify any details about the cancellation. These conversations can provide insights into whether there is an opportunity to resolve the issue.
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- Request Reconsideration: If appropriate, ask if there is a chance to rectify the situation or negotiate a continuation of the contract. Provide any necessary documentation or evidence that might support your case.
- Inform Your Clients
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- Prepare a Communication Plan: Drafting a comprehensive communication plan to inform your clients about the upcoming changes is an initiative-taking step. This plan will inform your clients and reassure them that you are working on alternatives, thereby maintaining their trust and confidence.
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- Provide Options: Present alternative coverage options from other carriers you work with to minimize disruption for your clients.
- Review Other Carrier Contracts
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- Assess Alternatives: Review your contracts with other carriers to identify gaps or areas where you might need to increase your efforts to maintain client coverage.
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- Negotiate New Contracts: If necessary, start negotiating new contracts with other carriers to fill any gaps the cancellation leaves.
- Legal and Compliance Check
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- Consult Legal Counsel: If the cancellation appears unjust or has any legal complexities, consult with legal counsel to understand your rights and potential courses of action.
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- Regulatory Compliance: Ensure you comply with all regulatory requirements during this transition period.
- Internal Review and Strategy Adjustment
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- Performance Review: Conduct an internal review to understand any shortcomings that may have led to the cancellation. Use this as a learning opportunity to improve your operations and relationships with other carriers.
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- Strategy Adjustment: Adjust your business strategy to mitigate the cancellation’s impact and prevent similar situations in the future.
- Document Everything
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- Keep Records: Maintain detailed records of all communications and steps taken in response to cancellation. This documentation can be crucial if disputes arise, providing evidence of your efforts to comply and resolve the issue.
- Stay Positive and Proactive
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- Maintain Professionalism: It’s important to stay professional and proactive in all your dealings with the carrier, your clients, and other stakeholders. This approach not only preserves relationships and builds trust but also shows respect for all parties involved, making them feel valued and respected.
Additional Resources
The recent introduction of countless AI tools and platforms has significantly impacted the insurance industry. As technology advances rapidly, the AI Marketing Toolkit can assist with the workload, particularly in tasks such as data analysis, risk assessment, customer service and the following:
- Prompting guidelines
- Ways to use for marketing and sales
- How to leverage your SEO strategy
- Considerations for AI-powered chatbots
- Specific tools to use
- Best practices
The Trusted Choice AI Marketing Toolkit can generate high-quality marketing materials and execute marketing campaigns. Download it and explore! You will need your username and password to access Resources & Training – Trusted Choice (independentagent.com).
As an (OIA) Ohio Insurance Agents member, you also become a member of the (Big I) Independent Insurance Agents and Brokers of America at no additional cost. Your membership includes tools and resources like the Trusted Choice Hard Market Toolkit. To download you will need your username and password to access Resources & Training – Trusted Choice (independentagent.com). The Hard Market Toolkit provides templates, letters, talking points on the state of the insurance industry, and information for better dialogs with your clients and prospects.
These are beneficial guides that help you navigate the process along with information and valuable tools for your agency!
Legal Disclaimer: This material is intended to provide you with general background and insight. The material does not constitute, and should not be regarded as, legal advice regarding any particular facts, circumstances, or issues. This material is not intended to serve as a substitute for legal counsel, and we advise you to contact legal counsel for specific analysis, drafting and advice.
More Information: Seek your trusted advisors Attorney, Banker, and CPA that your legal and financial interests are adequately protected. The information provided in this publication is not intended to be a substitute for legal advice. You should consult your legal counsel and make certain that you are in compliance with state law. These laws and rules are subject to change. If you have more questions about this guide, you can contact: OIA at (800) 555-1742 for the most up-to-date information.
Cited Resources
IIABA (Independent Insurance Agents and Brokers of America), Trusted Choice Toolkit, AI Marketing Toolkit
Resources & Training – Trusted Choice (independentagent.com)
About the Author:
Jeannine Giesler, CISR, CPIA, and past President of the OIA Board of Directors, Foundation for the Advancement of Insurance Professionals, currently serves as Resource Center Advisor for the OIA. The purpose of the Resource Center is to contribute to building a comprehensive library of resource materials for our members. We pride ourselves on being the one-stop shop for all OIA members and work to solve every problem or situation you may come across.
