The Professional Insurance Agents of New Jersey Inc., announced that it has “won a victory for small business owners throughout the state as the Assembly Banking and Insurance Committee unanimously released a bill, A.3319, sponsored by Assemblyman Neil M. Cohen (D-District 20), chairman of the committee.”
The bill, initiated by the PIANJ, “would protect the livelihood of thousands of independent agents by preserving their ownership rights and policy information when business is transferred from one insurance company to another.” It would ensure that agents’ ownership and commission rights are continued when an insurance company transfers its policy obligations to a new company.
“Tremendous harm results when an insurance company is allowed to transfer policies to another company that refuses to recognize the agent as the owner of his book of business,” PIANJ President David J. Madara told the committee. “Quite simply, the transfer deprives the agent of his most valuable asset without any compensation.”
The PIANJ explained that “Insurance agents build what is commonly known as ‘books of business’ or ‘renewal rights,’ information about a policyholder, such as names, amount and type of insurance and the dates of policy expiration. This information is gathered by the agent who sells the insurance, at his own expense, and is used by the agent to service the business and renew coverage for his customer. Virtually all contracts between independent insurance agents and companies declare the agent to be the exclusive owner of this information.”
“This information is the foundation of customer relationships that take years to develop,” Madara stated. “Without the protections provided in this bill, insurance producers are at risk of losing their most valuable assets when a company decides to transfer its business.”
He informed the committee that in recent years transfers of business have increased, including several companies that discontinued and transferred their personal automobile insurance business. When an insurance company ceasing to write business finds another to assume its obligations to provide coverage, it will transfer policy information to the new company so it can offer additional coverage to policyholders.
Madara praised the “committee’s decision to press forward with this legislation,” indicating it is “a fundamental issue to independent agents that can’t be denied or ignored.”
Was this article valuable?
Here are more articles you may enjoy.