Insurance Broker - Agency Agreement Insurers Terminated Mutual Agreement

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You are an insurance broker. Your agency agreement with one of your insurers has just been terminated by mutual agreement.
Explain the legal implications of the following three situations regarding the termination:
(a) New business quotations that have been provided to potential clients and which are within the 30 day validation period.
(b) Mid-term alterations to policies held by existing clients.
(c) Policies for which the renewal terms have been accepted by existing clients.

Solution to An Insurers Terminated Mutual Agreement Question

(a) New business quotations that have been provided to potential clients and which are within the 30-day validation period

According to Dewing (2015) under the agency law, potential clients are part of the business and as they await the validation of their business quotations, they are still part of the business. Agents acts on behalf of the organization and thus the quotations would still be processed by the organization. However, it is necessary to inform them prior to allow them to decide whether they would like to continue the agreement without the broker or the agent who may have referred them to the organization. The fiduciary relationship that exists between the organization and the broker in this case states that any form of undertaking is done in reference to the organizations practices and as per the agreement between the two.

[blur] By leaving the organization on the basis of a mutual agreement, the principal will continue addressing the new business quotations even if such quotations will be handled by another person on their behalf. Another aspect that comes up in instances of the corporations is that corporations are simply beings and they can only interact with customers through the agents. Even if the agents had committed to any form of actions that would amount to liability but still it was part of their mandate, then the principal would still be liable. The quotations will thus be processed as normally. [/blur]

(b)  Mid-term alterations to policies held by existing clients

[blur] Any form of alterations that are being undertaken would also proceed normally in the same way any organization would consider restructuring its systems. However, prior to the alterations, there has to be the agreement between the organization or the principal with these customers. The policy suggested previously must be well rephrased to ensure the customer understand the issues as they pertain to the new agent that will sell the policy to them. Just as in the first case, it is often worthy to notify the clients that the previously working individual has ceased undertaking tasks as an agent. Such awareness allows them to be aware that they can still rely on the company to make the decision. Further, it allows them to cease any form of transactions that they may wish to undertake (Dewing, 2015). [/blur]

[blur] All in all, if a customer is not content with the agreement as per the new alterations they can ask the organization to cancel on their policies. In some instances, some customers may request that the agents that presented the policy be present or they will fail to honor the agreement. In such a case, the customer has the option of leaving if they feel the other agents have not addressed their concerns in the same way. However, the company could still call in its previous agent who also has the option of accepting or rejecting. [/blur]

(c)   Policies for which the renewal terms have been accepted by existing clients

[blur] For policies whose terms have already been accepted by the clients, there is not much that can be done considering they have already signed agreements. The signing of any agreement in this case is done between the client and the company and the broker who facilitated the undertaking is part of the institutions just as any other employee of the company. Thus, for courtesy purposes, the clients may be notified that the broker is not part of the business anymore and that any further agreements need to be done either by other parties or by the organization itself. The clients whose renewals terms have been accepted, and in turn, they have accepted them by signing on the agreements can only be viewed [/blur]

As part of the company. They cannot renege or go back to deciding as they have already accepted the terms and have signed these agreements. In addition, clients purchase products and an agent is not part of such a product.

Insurance Broker - Agency Agreement Insurers Terminated Mutual Agreement

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