Wednesday, May 10, 2006

Restraint of Trade, and A Lesson...

For a very, very long time, most types of insurance have been sold through the General Agency system. Briefly, a carrier contracts with a General Agent, which acts as a distributor, usually for several carriers. The GA then contracts with individual agents who actually sell the product to the public. The GA provides technical and administrative support to the agents, and acts as a conduit for compensation (commissions, overrides, bonuses, etc). Very good GA’s act as advocates for the agent if there are “issues” with the carrier, and act as “backup” for the agent if a client has one (see: Cylons).
Because we enjoy a free market system, agents are free to move among GA’s, picking the one (or ones) that best suit their needs.
So far, so good.
Now one carrier has adopted a strange and provocative tactic: it has “frozen” such transfers. That is, if I represent that company, and I have a problem with my GA, well, too bad. I can’t switch to another one.
And that is “restraint of trade.”
Now, I happen to have an excellent GA, and can’t imagine a situation where I would wish to change to another one. But, I fervently enjoy my freedom to do so should the need arise. When I received the letter this afternoon, announcing this new company directive, I immediately called the Attorney General’s office.
Now, you may ask, “Henry, it’s an insurance company, why didn’t you call the Department of Insurance?” There are two answers:
First, this is a legal, not an insurance, issue and second, the DOI is useless in this matter. Their primary constituency is not the consumer, nor the agent, but the carriers. So even if they could do something, it's unlikely that they would.
So, I spent the next 40 minutes being shunted around the AG’s office, growing more and more frustrated because no one seemed to know whether or not there was anything they could do. At one point, a (nice) lady admitted that they didn’t do much legal work in her area, which led me to ask why I was paying their salaries.
Eventually, I ended up with an actual, real live attorney. So, for the fourth (fifth?) time, I repeated my story. He replied that the Department of Insurance (DOI) was his client, so he didn’t see what he could do. I am proud to say that I did not, in fact, point out to him that I was his client, since I pay his salary. Rather, sensing that this would not move the ball forward, I let it go.
He did give me the phone number for the Anti-Trust Department, and wish me luck.
I decided that I needed a bigger gun.
One of my clients also happens to be my State Representative, so I decided to bring the Legislative Branch into play. I called him, and explained the situation. At first, he offered to speak with the DOI, but I was able to redirect him toward the AG’s office. He promised to have someone from Anti-Trust call me, and (more importantly) to call him back, so that he could stay in the loop (and involved).
That’s the game so far; I’ll keep you posted on my progress.
Oh, the lesson? If you’re an insurance company, try not to tick me off.
UPDATE (5/12/06): A gentleman from my Rep's office called, and I explained the situation to him. He's promised to contact the Anti-Trust folks at the AG's office, and to stay in the loop, as well. And indeed, I've been copied an email he sent to the AG's office.
It would be nice to know if there are other agents (and/or brokers) who are affected by this unfortunate decision. If so, please email me (addy in profile).
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