Agent Release

[dabulls]

The industry standard is if an agent has not submitted business for 6 months they are free to move to another IMO/agency. So if your current IMO/Agency will not release you, you have to stop writing business for 6 months. They can not legally prevent you from writing business. It just means that every time you submit business your 6 months starts over.

Churning business or rolling your block is NOT illegal in the the state of Texas. The DOI says it is perfectly fine as long as you are placing your client into a better situation and doing a proper replacement. However, you need to be careful and consider these factors.

1. If your client has had your original policy for over 2 years then you should leave them alone or only ad coverage. Why? Because they are past the incontestability period. If you replace that policy you are placing them into a new 2-year contest. If your client dies during the new 2-year contest and the new company does not pay the claim. The family could file a lawsuit against you.

2. If you are receiving renewals from the company that you are replacing. That company could terminate you and keep all your renewals. Most insurance companies do not tolerate an agent replacing their own business or other agents business that is appointed to the same company.

So let us say you are independent and have multiple contracts with insurance carriers. You come across an American Amicable policy that you can replace but you are also appointed to sell American Amicable. If you replace the policy an AmAm finds out, they will terminate you.

So if you live in a state other than Texas have your significant other get licensed and have him or her churn baby churn.

Also, to avoid being terminated for replacing business you have contracts with, just "forget" to fill out the replacement forms. Easy peasy.

PS: this is sarcasm

 

[VolAgent]

Churning is always illegal. The definition of churning is to replace business for the purpose of generating a new commission.

Replacing business to improve a client's situation (which is a very nebulous term) is always legal. Just hope a third party agrees that the purpose of the replacement was to improve the client's situation and not to generate you a new commission.

 

[Todd King]

Agreed! Some don't seem to get the understanding of "Churning" the way it is intended.

 

[Rirwin]

Churning is always illegal. The definition of churning is to replace business for the purpose of generating a new commission.

Replacing business to improve a client's situation (which is a very nebulous term) is always legal. Just hope a third party agrees that the purpose of the replacement was to improve the client's situation and not to generate you a new commission.

You are correct, but don't all or most carrier contracts sign that you will not replace your own business? So even though it's legal by the Doi, you potentially could still have some issues with the carrier for not upholding your contract. They prob will just term you, unless it cost them significant financial damage then they could sue you.

 

[Life Hawk]

You are correct, but don't all or most carrier contracts sign that you will not replace your own business? So even though it's legal by the Doi, you potentially could still have some issues with the carrier for not upholding your contract. They prob will just term you, unless it cost them significant financial damage then they could sue you.

How many policies are you all replacing?

I make the occasional replacement... who in the world is replacing enough that there could be potential litigation...

You can't build a business that way.

 

[VolAgent]

You are correct, but don't all or most carrier contracts sign that you will not replace your own business? So even though it's legal by the Doi, you potentially could still have some issues with the carrier for not upholding your contract. They prob will just term you, unless it cost them significant financial damage then they could sue you.

Quite true. It would depend what is written in the contract. But any agent who thinks they can wholesale roll a book is just begging for a nasty gram which may actually lead to a courtroom.

I doubt many do enough to matter, or run into a company that is hyper aggressive on protecting their book.

 

[Rirwin]

How many policies are you all replacing?

I make the occasional replacement... who in the world is replacing enough that there could be potential litigation...

You can't build a business that way.

I never replace my own business, I'm not Travis Tubbs. I was just saying that for them to really pursue this further than just terming your contract it would have to require them to lose a lot of money and be able to prove it.

 

[Migshannon]

You are correct, but don't all or most carrier contracts sign that you will not replace your own business? So even though it's legal by the Doi, you potentially could still have some issues with the carrier for not upholding your contract. They prob will just term you, unless it cost them significant financial damage then they could sue you.

This is from the TDI Insurance fraud section. So there is a difference between replacing and churning in Texas. Churning is illegal. Replacing is not. I made a mistake in my previous post about churning, according to the TDI definition. Apologies! Insurer Fraud Section

Common Types & Schemes
Deceptive Agent Practices

• Agent Application Fraud: Agent forges an insurance application using information from an unsuspecting person to obtain commissions.
• Clean sheeting: Agent conspires to acquire life insurance without disclosing life-threatening illness.
• Conversion: Agent retains customer premiums, provides the customer with fictitious insurance documents and issues fraudulent liability insurance cards. May involve the conversion of annuity funds.
• Churning: Agent induces customer to use cash value of existing policy to purchase a new policy, resulting in another commission for the agent.

Bottom line. If you are going to be replacing your own business better make sure you do it by the book.

 

[OregonDuckLaw]

IMO's and agencies not willing to sign a release is unbelievable to me. I get it if they have invested a lot of money in leads for the agent and need to get reimbursed but in general the ones that won't sign are just plain ruthless and unethical. We had a guy want to sign up with us but couldn't because the other agency wouldn't sign a release even though the agent had been with them for only five days.

 

[goillini52]

IMO's and agencies not willing to sign a release is unbelievable to me. I get it if they have invested a lot of money in leads for the agent and need to get reimbursed but in general the ones that won't sign are just plain ruthless and unethical. We had a guy want to sign up with us but couldn't because the other agency wouldn't sign a release even though the agent had been with them for only five days.

So, who was this ruthless and unethical.IMO/agency?

Do you give releases?