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PIA Educational Series: Why Agents Own the Book

Those who were present at the PIA National board meeting in April heard Bob Weil's presentation on the long standing case law that exists...
May 5, 2003

PIA National's Plan of Action for Education on This Issue

The memo below outlines the PIA National Business Issues Committee's plan of action for a national education mission on "Why Independent Agencies Own the Book."

Those who were present at the PIA National board meeting in April heard Bob Weil's presentation on the long standing case law that exists in all states which acknowledges agents as the owner of expirations. It's important to understand the root of why the courts have acknowledged agents as owners of the book so that agents are able to properly protect their ownership rights.

Ownership rights are in peril of infringement in this "privacy-obsessed" climate. This is because much of the information addressed by state and federal privacy statutes as "protected information" is also the same information contained in agent expirations--there are also other reasons to be concerned (i.e. misguided statutes addressing agent ownership rights). As the book of business is the most important asset comprising an agent's book, we encourage you to read the memo below by clicking on the Full Story link to the left.


April 6, 2003
TO: PIA National & Affiliate Leadership
FR: PIA National Business Issues Committee
RE: PIA Position of "Why Independent Agency Owners OWN"

What does Weil's presentation mean?

The presentation and discussion during the PIA National Board Of Directors' April meeting by PIA outside counsel, Robert J. Weil of Howe, Anderson & Steyer (D.C.) is the formal beginning of a public education of parties-at-interest with regard to independent agency owners' rights and established ownership of their agency assets.

Will we get a copy?

This effort will produce a series of educational pieces that speak tocritical aspects affecting the ownership, content and control of the independent agency's core asset - "the book of business." The series will also address that specific piece of the agency asset in the whole of the agency as a business/corporation.

Why is PIA undertaking this effort?

The three major reasons for these actions are:

  1. The history of independent agency ownership is not formally taught by any insurance organization. Thus, new people, as a whole, coming into the business have no way to appreciate the critical meaning and obligations/rights of ownership irrespective of whether they are working for a traditional independent agency carrier, independent agency corporation or are a regulator.
  2. As PIA predicted in 1994 - currently the growing insurance marketing-arm of choice in all lines of insurance is the independent agency. While presenting PIA agencies with more line/carrier opportunities, it also means that PIA agencies are partnering with an increasing number of carriers that heretofore have been steeped entirely in either a direct-response or captive agent system. These carriers recognize the business benefit they derive from doing business with independent agencies, but do not have any experience/knowledge to grasp the legal import of these new relationships.
  3. November 1999 marked the formal federal establishment of the financial services industry with the signing into federal law of GLBA. This terminated the independent industry status of insurance, and made us a formal third segment of this new federally regulated industry. One of GLBA's many purposes was to create a federal legal framework by which participants could enter as direct competitors into each other's segments. This increases the number of parties-at-interest that are not at all educated to the ownership rights of independent agencies, parties that have actively exercised their own view of their ownership rights.

While some of these new people may have a vague recognition that something of this nature exists, their understanding is - at best - not well enough formed/informed so that the individual can act or not act accordingly. At worst, other parties-at-interest could see independent agency ownership rights as interfering with and/or immaterial to their ownership rights that they view as pre-emptive of others.

What are some signs of these problems?

The most currently illustrative evidence of this problem is HIPAA. HIPAA regulations require that covered persons must advise/direct/instruct their business associates in a number of compliance actions. Among these, HIPAA directs that actual language must be included in the agreement with these business associates advising them that when/if the relationship is terminated that the business associate must destroy all files relating to any individual's information within 30-days, if not sooner. However, HHS appropriately/wisely added (after many public comments, PIA among them) a modification to this (and a number of other areas) with the phrase, "if feasible."

Despite PIA explaining to carriers during the last round of their privacy amendments why this requirement is both not feasible and illegal, we again see health carriers issuing these requirements in amendments to agency agreements, and once again without the qualifying phrase permitted by HSS - "if feasible." When PIA discusses these issues with these carriers and their counsels, their retorts make clear that they do not know, understand or appreciate the critical legal differences between their old marketing force and current independent agencies nor the changes that they must make to their business dealings with PIA agencies as a result.

What can we expect?

PIA National will issue a series of to-the-point educational papers addressing/instructing on a particular aspect of independent agency ownership. The series will treat two subject areas:

1.  The first subject area will speak to the fundamentals of independent agency ownership. The first 3-paper series in this segment will be:

  • Why independent agency own.
  • What is meant by the independent agency's books and records?
  • What is an independent agency's control?

All three are parts of a single whole - the foundation of why you own, what you own and your actions over that asset. Each part will begin with a statement of PIA advocacy/view/belief with legal site/discussion per the related aspect of Mr. Weil's presentation. There will be future subjects addressed as well.


2.  The second subject area will address contemporary issues occurring in the marketplace that create challenges/conflicts with the independent agency ownership. The first in this series is:

  • Privacy Regulations - Why Destruction of Records is NOT Feasible.

These papers will guide how actions (regulatory, carrier directed or business practices) should or should not be implemented because of their affect on the issue of ownership.

What do I do with these?

PIA National will be using our customary and usual media channels, as well as present the most relative material to carriers, counsels, regulators or legal process as required by PIA agencies' interests.

We encourage PIA affiliates to reprint. If an editing/rewrite is required, please advise and PIA National will do so or review and approve the version to be used.

We encourage all independent agency owners to retain these for both their reference/education guide and to be shared as is with any party-at-interest requiring education on these matters. We hope you will further refer such parties to PIA National for further reference.

Share any issues/ideas you believe need to be included in this series or need discussion in your state/agency because of a particular action.

What is the end goal?

The goal is to have a consistent, uniform PIA advocacy/legal opinion on this most fundamental, important character that makes independent agencies. In doing so we hope to improve our individual and collective actions/results as we educate, protect, defend and retain PIA agencies' ownership in whole.

Further, by providing this education to regulators, legislators, carriers, and other parties PIA hopes to influence better statutes, regulations and law expressed in reasonable fashion to both accomplish its public policy goals and respect our members' ownership rights, a significant asset from which states and the federal government derive tax income.

Who do I contact?

PIA National staff member Pat Borowski (