Threatening letter from former Insurance co. about replacement

[LifeVet]

I recently received a threatening letter from a former insurance company that I used to work for.
I went out on my own and became totally independent. Since then, I've replaced several policies
from my former company to better serve and enhance benefits for my clients.

Well, I got a letter from this former Insurance co. saying; We will impose contractual penalties under
your contract. Will pursue legal actions for tortious interference with business relationships against me and any insurer accepting future business from me. And forfeiture of future renewals.

Any thoughts? Scare tactic? Should I continue to replace if in the best interest of client?
Your thoughts are appreciated!!!!

 

[rousemark]

You are the one that signed the contract with the previous company agreeing that you would would not replace after you left and if you did the company could impose penalties against you. The company is simply saying they are going to uphold the contract.

Now, the questions for you are, "Is the best interest of the client what is really driving your actions.. or is it the commission on the new sale? If it is the best interest of the client, you will replace their business even if it means that it is going to cost you several thousand dollars. If it is the commission, you may decide that it is not enough to make it worthwhile to replace."

 

[Robert Barney]

What does the contract actually say about replacement or approaching previous clients?

 

[DHK]

Should I continue to replace if in the best interest of client?

Can you LEGALLY prove that you were acting in the best interest of the client through a fiduciary duty contract?

Do you hold an analyst license in your state that allows you to charge a fee to analyze contracts?
Did your client pay you a separate fee to analyze their contracts?
Did your client sign an engagement agreement for fiduciary services?
Do you have such agreements drawn up by an attorney?

How can you PROVE you were acting in the "best interests" of your client without such things to contest your prior employer's assertions that you are just replacing business for new commissions against their non-solicit agreement?

This thread talks about some of that with MichaelBurton - a poster who holds those licenses and has those contracts in place with his clients:
https://insurance-forums.com/commun...levels-for-term-insurance.82838/#post-1113743

 

[shonceman]

I recently received a threatening letter from a former insurance company that I used to work for.
I went out on my own and became totally independent. Since then, I've replaced several policies
from my former company to better serve and enhance benefits for my clients.

Well, I got a letter from this former Insurance co. saying; We will impose contractual penalties under
your contract. Will pursue legal actions for tortious interference with business relationships against me and any insurer accepting future business from me. And forfeiture of future renewals.

Any thoughts? Scare tactic? Should I continue to replace if in the best interest of client?
Your thoughts are appreciated!!!!

Captive companies face this situation all the time: An agent they trained and trusted with a book of business leaves, then starts prospecting in their book. They have every right to protect their business. And yes, it is their business, not yours. You worked as their employee for their interests. You also likely benefited from that relationship in one or more ways. Whether they pursue legal action or not (and they might!), it's not right, IMO, to raid your old book (if that's what you're doing).

 

[62Dodd]

Read your contract and do the right thing!

 

[Newby]

I recently received a threatening letter from a former insurance company that I used to work for.
I went out on my own and became totally independent. Since then, I've replaced several policies
from my former company to better serve and enhance benefits for my clients.

Well, I got a letter from this former Insurance co. saying; We will impose contractual penalties under
your contract. Will pursue legal actions for tortious interference with business relationships against me and any insurer accepting future business from me. And forfeiture of future renewals.

Any thoughts? Scare tactic? Should I continue to replace if in the best interest of client?
Your thoughts are appreciated!!!!

It’s real bad form to go approaching your past customers to replace their policies.

If they were actively shopping and called you, that’s a little better for your case. As long as there isn’t but one or two.

If you failed to fill out replacement forms on any of them, you might be fighting to keep your license. That’s really bad. Better lawyer up if that’s the case.

 

[somarco]

How much time elapsed from the point where you left bad company's employ and when you tortiously replaced the old policy with a better policy?

 

[walthamny]

You cant replace your former clients so that you can better service them once you become independent. You can replace policies if the new policy is better or it provides a new benefit that the client needs and wants. Now I also left NYL after 8 years. One way around was that when I left I added tax planning and filing tax returns to my practice so it was easy for me to approach them and the conversation naturally went into their life insurance and investments. I replaced most of them but I also have some clients that still have NYL whole life, either they bought it from me long time ago and it is not worth replacing or their health has gone down. If you replace all your book, you make it easy for them to sue you.

You can keep contacting your captive business and ask for referrals by the way. They wont be able to sue you for that easily, also your captive book needs will change, they will have more children, get divorced, get a raise, win the lottery. You dont want to give up the future business on your captive book. As their needs change, write the new business and see if it makes sense to replace at that time your old captive policies. Sometimes the answer will be yes and sometimes no. make sure you document where the client agreed to replace but you recommended no so that if you are ever sued, you can counter argue that you were just replacing policies when it made sense.

 

[adjusterjack]

I've replaced several policies
from my former company to better serve and enhance benefits for my clients.

Yeah, right.

Should I continue to replace if in the best interest of client?

At your peril.

You've been seriously warned. Your next replacement could very easily be followed by a lawsuit that could put you out of business and into the poor house.