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Pa. Court Upholds Rights of Terminated Insurance Agents

A new decision by a Pennsylvania court could have far-ranging implications on what happens to an insurance agency's book of business if a carrier terminates...
February 6, 2008

A new decision by a Pennsylvania court could have far-ranging implications on what happens to an insurance agency's book of business if a carrier terminates its contract. The ruling upholds an earlier decision by the state's insurance department.

The case centered on Everett Cash Mutual Insurance Co., which terminated its contract with the small Coatesville agency C. Kenneth Grant Inc. According to a report in Insurance Journal, that termination was set to take effect in Jan. 2006. Several months before, however, the company began sending non-renewal letters to its clients insured through Grant, saying their policies would no longer remain in effect after the anniversary date of their policies.

According to Leadbetter's ruling, the law required ECM to offer renewals to those clients for 12 months after Grant's contract had been terminated.  Barry Norton, principal of the agency, said the ruling upheld the rights of agents to maintain their books of business in the face of a termination.

David Eppinger, vice president for research and development at ECM, said the company's whole goal in taking the case to court was to establish a case law in how the run-off procedure should go. "We wanted a legal decision handed down," he said. "We wanted a decision rendered one way or the other. We really didn't care which way it went as long as there now is case law to stand behind so that (insurers) all are treated equally."

Court Upholds Rights of Terminated Insurance Agents (Insurance Journal 1/29/08)