Question from an IIABNY member: We have had a client in the past couple of years cancel for nonpayment on his auto policy. The last two times were for not sufficient funds. He doesn’t qualify for any of our standard markets due to the payment history. If one of the nonstandard companies would take him back, are we obligated to write him again, or can we tell him no, due to his past payment history with our agency?
Answer: Unless you’ve signed a contract with the client promising to obtain insurance for him, you have no legal obligation to continue your business relationship with him. The New York Insurance Department (now the Department of Financial Services) issued a 2006 advisory legal opinion stating:
The Department’s longstanding position is that a broker may discontinue its relationship as a producer with an insured either during the term of the policy, or upon renewal time, absent contractual agreement to the contrary between the producer and the insured or the insurer. The terminating broker should advise the insured of the right to continue coverage with the insurer, and the right to choose a new agent or broker if the insured so desires.
As business people, we recognize that there will always be circumstances when services required of a particular client demand that we set aside the desire for profit and instead do whatever is necessary to assist the client at that time. However, no business should begin and/or continue a relationship that is guaranteed not to produce a profit. Who would deliberately map a plan to go out of business by dealing consistently with unprofitable clients? It's a no-brainer that the DFS should allow an agent not to create/continue a business relationship with a client guaranteed to cause an unprofitable circumstance.
Posted by: Ed Higins | March 07, 2012 at 02:00 PM
Ed,
I completely agree. Unfortunately, I think there are a lot of agencies out there who think that they have to put up with bad customers forever. They don't have to do this, and they shouldn't.
Posted by: Tim Dodge | March 12, 2012 at 11:41 AM
I totally agree with this one! By law, agencies are not required to deal with such clients. Basically, it's the decision of the agency. But in the first place they shouldn't even bother.
Posted by: car insurance for a day guru | April 23, 2012 at 04:42 AM
I also completely agree. I don't know any insurance brokers kitchener that would take on someone that they don't feel comfortable dealing with. http://www.pionins.com If a client comes with too much 'baggage' then the insurance company has the right to decline them. Thanks for this post.
Posted by: Lyla Burns | May 22, 2012 at 07:58 AM
Lyla,
Thank you for commenting!
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Posted by: Auto Insurance Agents In Binghamton, NY | July 25, 2012 at 12:07 AM
I also totally agree with what everyone else has said. My brother-in-law is works for a company of insurance brokers in Mississauga, and he and I have had a lot of conversations like this. At some point, too much is too much. And the "bad" customer will have to face the consequences of their actions. If that means they don't have coverage and something happens...hopefully they'll learn that in the future they should be more responsible. ( http://www.spriggs.ca )
Posted by: Robert Johannesburg | July 28, 2012 at 09:53 PM
Robert,
Thank you for the comment!
Posted by: Tim Dodge | July 30, 2012 at 02:14 PM
I completely agree.What is the need if of having insurance policy if you dont have sufficient funds to secure yourself.
Posted by: Business Insurance Texas | October 10, 2012 at 11:44 PM
This makes a lot of sense. As long as the reasons for denial of coverage are legal, I don't see the problem.
If I was an agent, I would certainly not offer insurance to somebody who always missed payments as well.
Posted by: Drew Mack | October 23, 2012 at 11:05 AM
Drew, exactly right. There are some reasons for refusing to do business that are not legal (race discrimination being the first example that comes to mind.) Absent something like that, no producer has to begin or stay in a business relationship with another person if that relationship isn't profitable for both.
Posted by: Tim Dodge | October 30, 2012 at 07:49 AM
Thanks for the post, but I've noticed that when that seems to happen. It seems as though it doesn't work out that easy and some of the people in this situation have to go to court to deal with it. Especially when it comes to something as big as insurance. http://www.dyckinsurance.com/
Posted by: Tyler agent | January 31, 2013 at 01:01 PM
Thank you for this article! It's very eye opening to what everyone has said, my sister and her husband are going through something similar to this. They live in Kitchener, there old insurance kinda did the "we can do this but..." on them and are looking for a new insurance to help them out a little bit. http://www.preceptgroup.net
Posted by: Tom Hardy | February 11, 2013 at 08:53 AM
In an unstable market depreciation insurance is a must but sadly people usually think of it when it is already too late.
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Posted by: Whitney Williams | March 21, 2013 at 06:32 PM
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