Can a Carrier Change All Policy Commissions on an Entire Book at Business?

Sep 14, 2016

  1. supradaddy
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    supradaddy New Member

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    There is an insurance company in Georgia that gave us a two week notice that they are reducing all NEW and RENEWAL business commissions effective August 1, 2016 by 3%. We just received our statement and it is showing they reduced the entire book of business by 3%. To my understanding, all NEW business should be paid at the lower rate and existing policies should still be paid at the higher commission rate until they renew after Aug 1, then they should drop by 3%. Can an insurance carrier change you're entire book commission with just a two week notice? We understand they should eventually drop down, but it shouldn't affect the policies we wrote even a month prior at the higher commission terms? I've tried to speak to the insurance commissioner's office but keep getting passed around from person to person. Does anyone know if this is legal or not? Thanks in advance!
     
  2. insurance1822
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    insurance1822 Guru

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    Who's the carrier?

    I heard from other forum members that State Auto & the Nationwide companies just did this.
     
  3. Derrick
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    Derrick Super Genius

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    Move the good people to a carrier that treats you well. Keep and sign up the iffy people on the company that is cutting commissions.

    If certain companies insist on treating us agents like dirt, we in turn need to just start sending our junk to them.
     
    Derrick, Sep 14, 2016
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  4. supradaddy
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    supradaddy New Member

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    Safeway, non standard. We have a few million in premium, so the cut is huge

    ----------

    On the nonstandard side, we are running out of options in Georgia. Most carriers are restricting new business or non-renewing. We have no problems with our standard and preferred carriers.
     
  5. marksinsurance
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    marksinsurance Expert

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    What does the appointment and contract you signed with them say?
     
  6. djs
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    djs Super Moderator Moderator

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    Are you paid monthly (as earned) for the premium? Or is it paid when written for the policy period?

    While the real answer is in the contract you signed, my guess is commission payments were changed, so if you are paid as earned on this business, then, yeah, they are probably changing it effective immediately.

    I just don't know many carriers that pay auto 'as-earned', though it does happen in non-standard. Because of this, I don't understand how they changed payments you already had on the books.

    Dan
     
    djs, Sep 14, 2016
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  7. supradaddy
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    supradaddy New Member

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    I'm not sure what it says in the contract. It was signed in 1989 and will have to be located. We are paid as earned commission. I guess we are just screwed. It wouldn't be that bad if we didn't have much business with them. But we have close to 3 million in premiums and 3% of that is a lot to lose.
     
  8. marksinsurance
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    marksinsurance Expert

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    I recommend looking for the contract. If you cannot find it, ask the carrier for a copy of it. You are flying blind without it.
     
  9. indienoise
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    indienoise Guru

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    Every contract I've ever signed states the carrier has the right to change their commission rates at any time. Still, it would be highly unusual to actually change the commission rate mid-term.

    As you may know, the nonstandard auto market in SC is just as tough. Literally every nonstandard carrier in my agency has been affected. Either leaving The state completely, not writing physical damage, or rate increases of 15% or more. The low income crowd soon won't be able to afford to keep their car insured. As if they needed more reason to non pay cancel.

     
  10. marksinsurance
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    marksinsurance Expert

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    Indienoise - agree with you. But, this contract maybe over a decade old, according to supradaddy. Which is why retrieving it first is probably the most efficient route. Or else, its guessing at what options he might have and worse, taking the carrier's word for it.
     
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