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PIA Affiliate in Pennsylvania Scores Victory on Behalf of Agents

The Insurance Agents & Brokers of Pennsylvania, a PIA affiliate association, recently experienced a far-reaching success with the support of a member. A member contacted...
February 12, 2008

The Insurance Agents & Brokers of Pennsylvania, a PIA affiliate association, recently experienced a far-reaching success with the support of a member. A member contacted IA&B in the fall of 2005 with questions about the Everett Cash Mutual Insurance Company termination process. After learning of the company's actions, IA&B staff informed the agent that his rights under the termination law were being compromised.

Pennsylvania has a nearly 30-year-old statute that affords a terminated independent agent a renewal and runoff period. For one year from the effective date of termination, all existing policies must be renewed by the terminating company for a one-year term. This affords agents time to contact the policyholders and offer an alternative market. ECM ignored the statute - renewing policies through the company's in-house agency after less than a year and immediately sending cancellation notices to policyholders.

Seeing the broader implications for agents across the Commonwealth, IA&B staff chose to represent the agency in the case and immediately raised an appeal with the Pennsylvania Insurance Department. IA&B staff and the prominent Philadelphia law firm hired by ECM submitted legal briefs throughout the summer of 2006. The two sides presented oral arguments on Aug. 29, 2006 before the Administrative Hearings Office of the Pennsylvania Insurance Department, and on January 30, 2007 the department rendered its decision and sided with the agent.

ECM appealed the department's decision to the Pennsylvania Commonwealth Court - the appeals court for state actions in Pennsylvania. IA&B staff served as amicus curiae, or friend of the court, and presented oral argument on behalf of all independent agents. The Commonwealth Court published its opinion on January 23, 2008 and held that the law clearly requires "an affirmative offer to renew or continue policies through the terminated agent for 12 months after termination of the agency contract." The decision showed an understanding of and respect for how independent agencies operate. The IA&B staff prides itself on successfully advocating on behalf of the agent in question - and for the betterment of all agents across Pennsylvania.

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