Guide To Agency-Company Appointment Contracts

• January 1, 2022

Agency appointment contracts form the legal foundation for the relationship between independent insurance agencies and insurance carriers. The agency-carrier contract should set forth the rights, responsibilities and obligations of the respective parties with respect to all material aspects of the relationship.

The provisions in the agency-carrier contract will likely trump any other written or oral understandings between the parties. Thus, it is imperative that agencies review, understand and, when necessary, seek to negotiate the terms of these contracts before signing and proceeding with a new or existing carrier relationship.

For decades, the Big “I” Office of General Counsel has worked closely with numerous national and regional carriers to provide input and proposed revisions to new agency-carrier contracts before they are released. In connection with these efforts, many carriers have agreed to adopt more favorable terms for agencies.

While carriers’ willingness to negotiate changes will vary significantly based on the carrier’s policies and the relevant circumstances, an agency may be able to secure significant improvements before executing a contract. The following guidance is offered to assist agencies in identifying the key concerns that most frequently appear in the agency-company contracts. It is typical to see one or more of these items in any given contract.

Nevertheless, this guidance does not – and is not intended to – identify every contract provision that may be important for an agency to consider. Agency-carrier contracts may raise a variety of other concerns that the agency should address with the applicable carrier, the agency’s professional advisors (e.g., attorneys and accountants), and/or the Big “I” Office of General Counsel as appropriate.