Allied Insurance - Agency terminations.

[gregcw]

This discussion is about Allied insurance Companies position on ownership of renewal information. I appointed with Allied in 2006 and was terminated for lack of production in 2010. The following is the language from their agency contract regarding Ownership of expirations.

Page 2 of 4. IX. Ownership of Expirations. Upon termination of this agreement by either party hereto. if Agent's account is not then delinquent and if Agent shall therafter remit to Company within forty-five days from end of the month in which business is charged to Agent, all monies due Company, the records, use and control of expiration shall be deemed the property of agent; otherwise the records, use and control of expirations shall be vested in Company,

During the time I was appointed by Allied I had no fewer than three field reps, none of whom discussed my production with me. When I was terminated I was told specifically that it was for lack of production. After my termination a letter was sent to my customers regarding the fact that I no longer represented Allied. These letters included a paragraph with the following language.

If you choose to continue your coverage with another company, you do not need to pay any renewal billing statement you receive from us. Please note: if you choose not to renew your policy with us, no further coverage will be provided after the expiration date set forth below. Allowing your policy to expire in this manner will not affect your ability to obtain insurance, nor will it impair your insurance record in any way

Which I believe is clearly solicitous and in contravention of my agency contract. Over the twenty-nine years I've been in the industry this is the only company that I've had that has OPENLY solicited the customer. All other companies have terminated the policies because I no longer represented the company regardless of which party terminated the agency contract. My feeling is that the ownership of renewal information should prevent them from offering renewals because to do that they have to use my property, the expiration date, to do that. Their response to my complaint was,

Thanks for the email. As I understand your question, Allied is in no way competing for your customers that is written with Allied. We fully acknowledge you are the owner of this business and will pursue placement of these customers in other companies. Pursuant to Oregon law, insurance carriers are obligated to provide the option to renew a policyholder if the consumer makes that choice and our non-renewal notice complies with this law.

This is based on their interpretatIon of Section 746 in the Oregon Insurance Code. I communicated with the Oregon Insurance Division and their opinion is that offering a renewal, when an agency is no longer appointed to represent a company, is neither permitted nor prohibited in Section 746 but that it would be a contractual matter, between the agent and the company. Has anyone else had similar experiences with Allied or any other company?

When I spoke with DOI, they suggested I speak with an attorney. When I did the attorney responded that this was a situation where the party with the deeper pocket had the advantage in court and that it was not a case that they would take on contingency. Does anyone have any suggestions? Because of this letter many of my customers have refused to speak with because they have understood or interpreted, from the letter, that I had done something wrong and now I am not able to keep them in my agency because of Allied’s behavior.

[AgencyEquity]

I know in California, by law they must send out the Auto Renewals for all good drivers. I would think they would do that under your own agency, but I am not completely sure about that. Having said that, I think Allied is certainly a player and has a place in the marketplace, but Allied has never been my first choice. The reason I say this because I have preferred not to sell on price, I have never found a good long term client based on price and preferred to work with carriers who judge an agency on their loss ratio vs. the Allied approach of underwriting to an extreme, production requirements and contract terminations. Nevertheless as I have said, I feel Allied does have their place and for high volume Agencies that do sell on price, Allied can offer some very attractive pricing. Each state is different, perhaps you can email them to get some clarification, but as I understand it, most if not all Independent Agency contracts give the renewal rights to the agency.

[d's insurance store]

I don't know that you can dictate that your customers 'speak to you' after receiving the letter, that in my experience kind of sort of follows the language announcing a severing of an agency/company relationship. I'm just very curious about that kind of behavior on the part of the client...in the two or three instances where I've lost an appointment with a carrier for low production, the clients had no hesitation calling me when the letters went out, if I hadn't already proactively contacted them to be on the lookout for the letter and to let them know there would be options.

I'm stumped on two issues here...if you're being cut due to lack of production, then just how many Allied clients did you have over the five year period? Did you load up the appointment in your early years and then just let it languish due to rate or underwriting circumstances? And, as stated, the mysterious refusal of your own clients to let you chat with them, indicating a degree of loyalty to the carrier that I've never experienced in my years of retail insurance. My 'normal' experience is that my clients trust me and neither myself or they trust the carriers.

And as much as you feel wronged by Allied, does the total premium really amount to enough that you can't just roll that book into one or two other carriers who might welcome the extra business?

[gregcw]

d's insurance store I think that the the client's behavior was predicated by the wording in Allieds letter that they sent. Regarding production, we were consistently growing from year to year, had a reasonable loss ratio and yes we did pro-actively contact the customers prior to the letter from Allied being sent.

As I indicated the three previous field rep's, one whom I had only seen at the PIAO Convention had never once complained about either my production or lack of production and no comment was ever made regarding my premium volume. Allied was number three in premium volume of my preferred carriers and growing. The last field rep came into my office, with his mind made up, on his first visit to my office.

As far as rolling the book, that was not the problem. It was the tenor of Allied's letter that caused the insured to feel that they should and that it was to their benefit to keep their coverage with Allied.

AgencyEquity Oregon does not have law which requires companies to offer renewal when terminating an agency. However, I do agree that if they do that, and those customers renew that I should receive a limited agency agreement to service those clients.

[jtownagent]

Contact your trade association (BIG I or PIA) immedaitely. This is the type of battle they should be fighting for you, and all member agents/ brokers. Nothing is more sacred to the American Agency system than ownership of expirations. I am sure your State Association would use the "clout" of their National Association in such an issue.

[marydavis]

I agree with Jtown, let the BIG I know immediately!!

[AgencyEquity]

I can certainly understand wanting to notify the Big I, but I think using the power of the marketplace is a much better way to go as carriers behave acordingly when agencies do that. I have seen it, they change their policies and underwriting if they are not getting production collectively from their agency force, I have seen this on more than one occassion. Allied has a right to do business as agreed with their agencies, provided they don't violate their contract. Allied does get a lot production because too many agencies want to sell on price instead of service. But when other agencies read about it on board like this, the carrier may develop an unfavorable reputation, that is why you don't have many carrier that practices what this carreir practices. Lastly, by selling the carrier with the lowest rates, you get what you pay for and worse yet, work a lot harder and get less commissions!

[OldIndyAgent]

Before you complain to your state association, check the association sponsors. Many of those big companies contribute large sums to the associations. I have seen this result in a lack of 'effort' on the part of associations to resolve issues like this.

[AgencyEquity]

Before you complain to your state association, check the association sponsors. Many of those big companies contribute large sums to the associations. I have seen this result in a lack of 'effort' on the part of associations to resolve issues like this.

That is why marketplace behavior is the best option. Often times, we want it both ways, we want the low cost carrier, we want excecellent service, we don't want strict underwriting conditions, we don't want production rules, and we don't want carriers dictating their ways. For most carriers, we probably can get 2 or 3 out of the 5 things we want, but to get everything is not sustainable. You can't go to a Chevrolet Dealership and get a Mercedes, it's not possible. Also one of the best things a small agency can do is join a cluster, alliance or agency network. This will allow you to protect markets and get profit sharing. Sure they will charge you a monthly fee or percentage of the commissions, but if in many cases and dependending upon the group you join, the return of investment is well worth it.

[gregcw]

Before you complain to your state association, check the association sponsors. Many of those big companies contribute large sums to the associations. I have seen this result in a lack of 'effort' on the part of associations to resolve issues like this.

That is why marketplace behavior is the best option. Often times, we want it both ways, we want the low cost carrier, we want excecellent service, we don't want strict underwriting conditions, we don't want production rules, and we don't want carriers dictating their ways. For most carriers, we probably can get 2 or 3 out of the 5 things we want, but to get everything is not sustainable.

I disagree with both of these posts to a degree. Both the IIA & PIA are in the business of promoting ETHICAL behavior in the industry. Not honoring an agency contract and mis-applying a state regulation to justify a companies actions is not ethical. I can't believe that either association would allow the dollar size of a companies support to allow them to compromise their position on ethics. While I know that I will never get everything I want from a company I feel that I should ALWAYS be able to EXPECT, DEMAND and RECEIVE ethical conduct and actions from any company I represent.

[OldIndyAgent]

I agree Greg they should, but it is the way it is unfortunately.

[Insurance Eagle]

Hey Greg, My personal advice is to beat them at their own game, they stoped playing by the rules when they went after your customers, intentional or not, it hurt you financially. So go at them with everything you have even, if you have to hire a new full time sales professional or two and or do it yourself, proactively solicit every single customer you have back, if they're not comfortable with you that's where you have the new person show his or her stuff off and get them back using price. Yes I said it, price, and so what, thats what their using to take your customers, so beat them at their own game and use your current preffered carriers or recruit a new one or two to get the job done, find thier Kriptonite company, everybody has one and if you don't already have one, then get one to attack them, preferably another prefered company who is A rated and can give the same great service, coverage and limits, but with a better price. Remember you have all of the customers demographics and even better yet what their paying and coverage limits, basically an open book. So call all of your most profitable customers back first, starting with the cream of the crop and then going from there, if you have alot of custoemrs you can also go the renewal method by contacting them each one by one a month before renewal to switch them over and then personally cancel their policy with the other company. Look, I know its alot of work, but they (Nation Wide) are counting on you being lazy, so prove them wrong, and remember it doesn't have to be just you calling, Hire talent to do it as well, or have them do it entirely, its up to you, but do it, or else they win. Remember in the battle between the mountain and the river, the river always wins not because its stronger but becasue over time constant pressure and persistence wins every time, and also remember, How do you eat an Elephant, One bite at a time. Meaning if you keep at it, you will win at least 80% of your customers back even if it takes a year or two to do it, oh well, and as a gift you can leave the bottom 20% of your book to them, you know the problem children, LOL...Also one more thing, I know it would be nice to have someone else fight your battles, like an association etc. but when was the last time thats happend for you, and for free at that, my advice is no one gives you anything in this business, let alone for free, so take it, and remember all your really doing is taking whats rightfully yours to begin with, plus they can't touch you by the contract you signed since you own the customers renewals anyways and better yet, all your doing is making sure the customer knows they can renew with you for a better price, you know as your duty as their agent you have to do it, by state law, right... Isn't that what they told you (Nation Wide) , LOL . So I'll end my book now by saying this, don't be a victim, be a winner and do it all by yourself, even if it cost you some the first year, by the second year it'll all be worth it, take it from someone who knows what your going through and has won this battle before as well, its not easy, but it can be done, but if your looking for it be done by someone other than you, your dreaming, not trying to be rude, just saying the truth as I see it...Insurance Eagle

[randrew54]

Keep in mind, Allied is owned and operated by Nationwide Insurance. Nationwide is famous for cancelling appointments and trying to solicit agency customers. Nationwide has done this for years with personal lines, commercial and even financial business. They have been able to get away with it because agents don't have enough money to fight them. I would personally never deal with a company that is affliated with Nationwide.