Agents question SDR on Texas Select unearned commissions policy
The Special Deputy Receiver (SDR) for Texas Select Lloyds, in response to a request from the Independent Insurance Agents of Texas for clarification on the billing of former Texas Select agents for unearned commissions, has offered additional information about the billing policy. The billing, began June 25 as a result of the liquidation of Texas Select in August 2006 by a Travis County district court, according to IIAT.
IIAT’s request came on the heels of agency members’ questions and comments as a result of the billing.
Texas Select was the sixth largest writer of homeowners insurance in Texas with more than 150,000 policyholders. The insurance commissioner designated the company as impaired, triggering action by the state guaranty fund to pay policyholder claims and refund unearned premiums. All policies were canceled effective Aug. 24, 2006.
The SDR answered these 10 commonly asked questions about the billing policy:
1. I don’t see where I have been given credit for my July commission check that was returned for insufficient funds.
Response: The SDR has been informed that the majority of commission checks that were issued, but not cashed or were returned as insufficient funds, have been voided in the commission system and thus credit has been included on this statement. If you believe that the check you received has not been credited properly, please mark the policy transactions in dispute, provide a copy of the cancelled check and the associated commission statement and submit payment for the undisputed amount.
2. The Attached Billing Statement contains “+” and “-” symbols. Please explain what these mean?
Response: The billing statement includes a summary of all transactions for each policy written by the agent that was in force as of Aug. 1, 2006. Positive commission amounts represent unearned commissions. Negative commission amounts represent earned commissions, usually on policies in which commission was earned and either never paid to the agent due to suspension of commission payments, or may represent amounts included in checks that were issued, but not cashed or returned for insufficient funds.
3. Will a payment plan be considered?
Response: The SDR will consider a short term payment plan in situations where a financial hardship can be demonstrated. The payment plan may include a signed note by the agent/agency with financial disclosure requirements and a personal guarantee.
4. I do not believe that the SDR has the legal right to make such a demand for repayment.
Response: All agents should consult with an attorney in the event that they dispute the SDR’s rights to recover funds. The SDR will review all letters from attorneys representing agents and assign them to counsel for proper review, consideration and response.
5. I concur with some of the amounts noted on the billing but dispute others? What do I do?
Response: It is recommended that you complete the form provided and note your disputes. These disputes will be reviewed. You can send funds to the SDR for those commissions that are not in dispute and you will receive proper credit.
6. I sold the agency and you sent me the bill. What do I do?
Response: The billing reflected the agent of record. You should consult your attorney related to your ongoing obligations to repay the due commissions. Your sales agreement may address this matter. In the event that you received prior approval of the company to sell the book of business, please provide that approval with your submitted information.
7. I incurred expenses in moving these policies and need to be reimbursed. Can I deduct these expenses from the billed amount?
Response: You cannot deduct these expenses from the billed amounts. You can and should file a Proof of Claim for those expenses. Go to www.sdrtx.com for Proof of Claim instructions.
8. Many of the noted policies on the billing were associated with the ASI assumption. Certainly the SDR does not hold the agent responsible for these agent balances?
Response: The SDR is in discussions with ASI representatives related to those policies and the obligation of the agents to refund commissions. At this time it is advisable for the agents to note on the listing which of the policies were transferred to ASI and provide that information to the SDR. The agent can make a partial payment of the undisputed owed agent commissions with a note related to the ASI policies as an issue in dispute.
9. Will the SDR consider any extension to the due payment date?
Response: The SDR will consider extensions in the event that a substantial hardship can be demonstrated by the agent.
10. Will the SDR take any regulatory action against my agency in the event that I do not pay the due agent commissions?
Response: The SDR will provide the Texas Department of Insurance with information related to the non-payment by agents. TDI will review this information and make appropriate decisions related to possible actions to take against agents for non-payment.
Agencies that have questions not addressed above may use an online form provided on IIAT’s Web site, at iiat.org > Governmental Affairs > Insurance Regulation.