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Sample Letter for Agents to Give Their Vendors

In the October 2002 PIA Connection, PIA National suggested that agents draft and issue a non-disclosure agreement to be signed by all of their third...
August 15, 2003

Letter Promotes Privacy Compliance and Protection of the Book of Business

In the October 2002 PIA Connection, PIA National suggested that agents draft and issue a non-disclosure agreement to be signed by all of their third party vendors-MVR, CLUE, insurance scoring, etc. The purpose of such a non-disclosure agreement is to prevent the third-party vendors with which agents do business from using client information beyond the completion of the requested transaction. Contractually limiting vendors from using the client information an agent gives them accomplishes a few things. First, it allows agents to comply with their outstanding carrier-issued agency agreements because many of these already require agents to issue contracts to their vendors protecting non-public client information. Furthermore, a non-disclosure agreement would also allow agents to comply with certain state and federal laws, like HIPAA, which also require agents to issue such an agreement protecting client information. Finally, a non-disclosure agreement also protects an agent's ownership of expirations, by preventing vendors from using expiration information inconsistent with the agent's ownership.

It is not prudent or legally feasible for PIA National to draft a model non-disclosure agreement for its members because (1) each member has unique business relationships with its carriers and vendors each of whom may require that different language be incorporated in the agreement, (2) the privacy laws in each state are different and again may require that different language be incorporated in the agreement, and (3) the liability issues faced by PIA National in issuing such an agreement would also be too great.

Therefore, instead of a model agreement, PIA National has written a sample letter for agents to give their third party vendors. Although this letter does not have the binding authority of a contract, it does place an agent's third party vendors on notice of the different privacy issues at play for the agent and the agent's ownership of expiration information. By giving such notice, it makes it harder for a vendor, who improperly uses private client information, to claim they were unaware of the protected nature of such information. However, PIA still suggests that members take the time to work with an attorney to draft a binding non-disclosure agreement.