Commission Reduction

[dbradle]

The brokerage that I sold LTC plans through sold most of their renewal business to an entity in Indiana in 2006. This company recently decided to reduce the agents' commissions by 30% without any prior notification. In my case, my commission from Nov. 2010 compared to Nov. 2011 was reduced by almost 70%. It appears the former agents are going to have to bring suit against the Indiana group. Does anyone have any experience with this situation? We do not know if we need to find a contract attorney in Indiana or whether the litigation could come from a different state. Any help or advice from someone in this forum would be greatly appreciated. Thanks

 

[Arthur Rudnick]

I've never heard of a situation like that before. You should have 2 separate contracts; 1 from the Agency and another from each carrier that you were appointed with.

What are the people from your brokerage agency telling you?

You may have originally assigned all of your comp directly to the agency, instead of having the carrier pay you your share, directly.

Either way, you need an attorney to review your contracts. I couldn't imagine the agency doing this unless they felt they had the legal right to do so.

Let us know what you find out.

 

[dbradle]

Arthur: Thanks for your reply. Since all of the former agents were captive, there was only one contract with the brokerage. What the current company who pays our renewals is saying, although it does not make sense to me, is this: a reinsurance group in Ireland along with the company in Indiana that bought the renewal business from my former brokerage insisted on creating a trust into which all the premium payments from the carriers would go. According to the Indiana group, which actually pays our renewals, the trust has not been paying them enough to pay the agents in full. They are saying that they have been paying the full commission by going into their own cash reserves. Apparently they could not go on doing this and have therefore decided to reduce our payments. However, our contract states clearly that if the policyholder pays there cyclical premium to the insurance carrier, then the full renewal commission is due to the agent. The president of the Indiana entity states that the situation is very, very complex. I told her that it is actually very, very simple. If our policyholder pays, then we are to be paid accordingly. I think we will have to bring suit against the Indiana group because of their failure to force the trust to pay what was due. That's where things stand at the moment. Thanks

 

[Frank Stastny]

The president of the Indiana entity states that the situation is very, very complex. I told her that it is actually very, very simple.

Could this be part of the problem? Jacqueline is always trying to reduce my "allowance". She tries to tell me it is a "very complex" issue too. It might just be a girl thing. Where is the "man" in charge?