Threatening letter from former Insurance co. about replacement

[VolAgent]

If you are getting love letters from an insurance company about replacements, my money is on that you were extremely aggressive in replacing or they are extremely aggressive in protecting their book. Either way suggests you will regret it if you don't stop.

 

[LGilmore]

Are your pockets deeper than theirs? You've done enough replacements early enough to draw attention from their legal office. Not good. It may not be fair or right, but they can simply break you in court costs if they so choose. They can tie you up for years.

What I would do is start looking for business outside of your old book. Give it a rest and come back at it in a year or so.

If you were captured with this company be careful. They don't want stuff like this to get out to their agency. Agents would be leaving and taking business away. They will seriously go after you as a message to everyone else.

There was a guy here a few years ago who was stupid enough to rub it in the insurance carrier's nose... They sued on contract and well, I haven't seen anything from the guy for maybe 3 years now. They basically broke him and bankrupt him.
So think carefully about your next move.

 

[jdeasy]

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!!!!

Yes, they intend to scare. They all claim to do what's best for the client unless that best doesn't include them.

Is there any teeth to that scare tactic? That will depend on the contract you had with them.

I recently had one threaten me with a contract violation on a replacement. It was more of a veiled threat than what you describe. I couldn't see anything in my contract would be a violation so I asked them what part of the contract they were saying I violated.

They got back with, "it doesn't appear in this case that you were in violation".

Many times they just want you to know that they are watching.

Then, as others have made reference, the company just has deeper pockets than you. They don't care to lose a case to send a message.

You need to read your contract and see if you are violating what you agreed to. If it's clear then you have to stop what you are doing. If it's ambiguous then you have a decision to make.

 

[dorado]

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."

This forum is to give and receive support from fellow agents...How do you know that he signed anything agreeing that he would not replace anything???
So you don’t think they might be one of these insurance companies that like to take advantage of agents and bully them???
Best interest...what about lower premiums and higher face??? Inconceivable?

 

[rousemark]

This forum is to give and receive support from fellow agents...How do you know that he signed anything agreeing that he would not replace anything???
So you don’t think they might be one of these insurance companies that like to take advantage of agents and bully them???
Best interest...what about lower premiums and higher face??? Inconceivable?

Would venture to say that the contract has some sort of restriction on replacement as the majority of those I have seen do. Have never had a company try to "bully" me other than insist that I uphold the contract and I don't consider that bullying

 

[scagnt83]

This forum is to give and receive support from fellow agents...How do you know that he signed anything agreeing that he would not replace anything???
So you don’t think they might be one of these insurance companies that like to take advantage of agents and bully them???
Best interest...what about lower premiums and higher face??? Inconceivable?

This forum is to give and receive not just support, but ADVICE. Rousmark gave excellent advice.

The reason Rous knows the OP signed a Contract with a non-compete, is because he fully read and comprehended the OPs post... which said the letter stated "contractual penalties". That means he signed a contract with a Do Not Compete Clause.

Rous also knows this because he has decades of experience in the industry. And he knows that Carriers dont send these letters unless the agent signed a Non-Compete. He also knows that almost every captive contract out there has a NCC to some extent.


IF the OP sold his clients a crappy policy that is not suitable, and he honestly just wants to "do the right thing"..... then he should refer his old clients to a friend who does not have a NCC.

What would those clients think if they knew he was breaking a legal contract by replacing their policy? Most honest consumers do not want to do business with financial representatives who violate legal contracts.

The "best thing" is to follow through with your word and be honest.

 

[VolAgent]

This forum is to give and receive support from fellow agents...How do you know that he signed anything agreeing that he would not replace anything???
So you don’t think they might be one of these insurance companies that like to take advantage of agents and bully them???
Best interest...what about lower premiums and higher face??? Inconceivable?

It does pay to read, both posts and contracts.

I have yet to see a contract from any company that did not address replacements, whether captive or independent. Many companies that work with independent agents will turn a blind eye to the occasional replacement, but the actual contract often forbids all replacements.

Perhaps more importantly, who cares what the contract says. The question is, is the OP willing and financially able to fight the company over this? Its great to talk about rights and what is legal, but unless you have the means to fight it to the bitter end, sometimes the smart move is just to walk away. It may not be "right", but often is the better move.

 

[shonceman]

What would those clients think if they knew he was breaking a legal contract by replacing their policy? Most honest consumers do not want to do business with financial representatives who violate legal contracts.

A lot of our clients would still do business with that agent if it means they'll get a lower rate. Sometimes I discover a nonmed case where a non tobacco rate was written on a client who's smoking a cigarette during the interview. They expect me to write them the same way because "who's gonna know?". I also get prospects who expect me to lie about some health condition so they can get preferred rates. I always tell them, "If an agent will lie to the company, he'll lie to you!" I'd like to believe our clients value integrity as much as we do, but I think they often value $ more.

 

[LGilmore]

Insurance companies do often over step on these type of things. NYL back a ways, put information in every termed registered rep file that they were fired with cause (illegal activity). Had to get a lawyer and challenge and got an immediate "sorry, our bad." from NYL. They do some sketchy things to agents who leave.
Know your contract. Figure out if it's worth it to hire a lawyer.

One other thing, I left NYL 20 years ago, still have all the policies I wrote on myself and family. Did not go back after clients to twist off business. Why? Because I wrote good business the first time.

As a customer, I would start to wonder about an agent who leaves one company and then comes back to me with a "better" deal. Why didn't I see the better deal first?

Outside of converting term or improving term, should an agent move a person out of a permanent situation that they put them in previously? At that point you're actually competing against yourself. Think about it.

 

[dorado]

Insurance companies do often over step on these type of things.

Exactly what I am saying.