Would anyone know how the unearned commission back charges are typically handled after the book of business is sold. Also, who gets the commission (after agency was sold) if the customer lets the policy expire and later can be convinced to re-sign with another carrier.
Commission Chargebacks After Agency Sale
- Thread starter blazjurko
- Start date
Part A - usually the contract is sold with the book of business, therefore nothing would change with chargebacks, other than potentially who a check is written out to.
Part B of your question - you would have to read the original contract to see if there is a non-compete. In many states, non-competes are not that enforceable, but, if it is within a few months, you might have a problem. Just follow the contract and nothing will happen.
Dan
Part B of your question - you would have to read the original contract to see if there is a non-compete. In many states, non-competes are not that enforceable, but, if it is within a few months, you might have a problem. Just follow the contract and nothing will happen.
Dan
- Thread starter
- #3
Thanks Dan,
We are actually working on the contract that will clarify how the commission back charges will be handled. We (new owners) will be responsible for the back charges and will later be reimbursed for those back charges by the previous owner. That part is clear.
However, the discussion is regarding who gets the commission on the customers that had let their policy expire and later decided to sign up again with the same agency and with another carrier. The period in question is only the first month after the closing. Previous owner is of the opinion that he would receive the commission as the original sale was done while the company was still his. We feel that the commission should go to new owners bacause the effort to keep the customer was necessary after the agency was sold.
Thanks and best regards,
- 1,641
And how will the old owner know you aren't rolling the business? New comp for you and chargeback for him? If you want the right to re-write, then you need to eat the chargeback, or come up with an acceptable ratio for sharing the charge and/or new comp.
How long is the lapse? In my P&C world a lapse generally has to be 60 days or longer for it to be considered new business. This prevents 'rolling' a book.
Of course, that would be with the same carrier, but you could/should use a similar mentality to prevent what PadThai mentioned.
Dan
Of course, that would be with the same carrier, but you could/should use a similar mentality to prevent what PadThai mentioned.
Dan
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