PIACT Opposes Agency Termination Proposals

March 11, 2004

The Professional Insurance Agents of Connecticut Inc. has issued an announcement indicating its opposition to House Bill 5547, which it says would “tamper with a section of Connecticut’s Insurance Law that provides important protections to many insurance agents and their clients throughout the state.”

PIACT representatives made their objections known during a public hearing before the Insurance and Real Estate Committee on March 2, 2004.

“Current law (Section 38a-709) states that when a licensed insurance company terminates an agency contract it has entered into with an insurance producer, the company must give the producer 90-days advance notice of its intention to terminate the contract,” the bulletin explained. “Also, when a company does terminate its appointment of an insurance producer, the law requires the insurance company to permit the renewal of all the contracts written by the producer for a period of 18 months from the date of termination.”

“The bill seeks to modify this section of the law by providing that 38a-709 would not apply to ‘any contract owned by the insurer where, upon termination of a producer’s appointment, the insurer offers to continue or renew the contract through another producer,'” stated Steven Imbriaco Esq., government affairs counsel, PIACT. “The wording poses several problems. Although the apparent intention of the language is to exclude direct writers from the protections of 38a-709, it still could possibly be interpreted to affect independent agents as well.”

The bulletin also pointed out that the “the bill’s language only requires an offer to renew a contract but does not require that a contract actually be renewed through another producer. The result could be that insureds will not have a say in whether or not they have an agent to work with.”

The PIACT indicated that the “changes proposed by H.B. 5547 would be detrimental to independent insurance agents’ ability to use the mandated 90-day runoff period to effect a smooth transition for their clients.”

“The minimal protections contained in this section of the law are critical to the independent insurance agents in the state. It is unacceptable to let ambiguous language muddy the waters in any way,” stated Imbriaco. “There is simply no need to make these changes at this time.”

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