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POWER TO AGENTS A collection of articles from Dean Auten, owner of Auten Insurance Services of Brunswick, GA, former Georgia Legislator, Legislative Liaison of Georgia Insurance Agents Alliance, recipient of Insurance Expo 2003 "VIP" (Valuable Insurance Person) Award and a great American! Why I am against Credit Scoring What Independent Agents need to be successful Don't Pee on Me and Tell Me It's Raining! Is Ignoring the Law Fraud?Tough times never last. Tough people do Why Be A GIAA Member?RELATED ARTICLES
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WHAT
RIGHTS? by
Dean Auten Auten
Insurance Services AUTEN@compuserve.com When
Eddie asked me to write an article on Agents’ Rights, we talked about
not using my true name. He thought “Ino Betternow” would probably be
a good name to use since it had been used in an earlier issue by an
agent explaining how gullible he had been in business dealings. I
had planned to use another name until the June GIAA Convention in Jekyll
Island. (If you didn’t attend, you missed a good one!).
The GIAA Board voted to work on getting some legislation passed
in the 2001 Session on Agents’ Rights. I
am proud of GIAA. Last year they took on SB69 and now they are willing
to be out front on an issue that is equal in its problems (read: chances
of passage) as SB69 was when they decided to support it as an
association. My
first response to Eddie’s request to write an article on Agents’
Rights was ... “What Rights?” Most of us have rights up to 30 days.
That is how long we have to change our operations if a company decides
to cancel us. If
you have never received one of those 30 day letters, I will give you an
example that even worse than a 30 day cancellation: “Effective
30 days from the date of this letter we (the company) will pay you 5%
renewal commission on all the business you have with us.” One
day you are receiving 15% and then with one little letter, the company
takes away two-thirds of your commissions. If you think this is
unreasonable to expect, let me remind you that a couple of years ago, we
had a company that sent out a “No Commission” letter. I have
personally had over 50% of the companies I represent make some change
... and not a one of them ever asked me for my opinion about their
change. With one company I signed a contract for 15% about 20 years ago.
Today, my largest book of business is with that company and the average
commission I earn on the book is less than 10%. Some agents have told me
that they feel sorry for me. Please don’t feel sorry for me ... send
MONEY!! Recently,
a company advertised that they were going to offer a noncancelable auto
insurance policy as long as the insured pays the premium and keeps his /
her driver’s license, they will not cancel. Like many companies today,
the company is planning to increase its Direct Marketing (they are
already doing business on a direct basis). Of course, they say their
direct marketing will not hurt their agents. They say advertising that
people who buy from them will get a noncancelable policy and that people
can save money buying insurance direct from them isn’t going to hurt
their local agents. I don’t believe you could sell that even to “Ino
Betternow”! I
happen to also represent that company (send more money!). I have spent
thousands of dollars trying to build a book of business for the company.
They will also be giving my insureds a noncancelable policy. My contract
with them also is noncancelable ...
for 30 days! What will happen to those noncancelable policies if
the company chooses to cancel me? I
hate to continue my drum beating about what HB1268 did to agents but I
know most agents still don’t accept the reality of HB1268. If you have
read my previous comments, you know I say that Georgia law takes
precedent over the words in a company / agency contract. If you believe
me, then you know that HB1268 made all personal lines (auto, homeowners,
personal fire, etc.) noncancelable except in certain situations: i.e.,
the company can only cancel an auto policy if the insured has more than
two at-fault claims within 36 months. Check out O.C.G.A. 33-24-46 by
clicking on the FYI Website at www.fyigeorgiaviews.com
and link up with the Georgia Legislature for the complete text. Every
Georgia insured has the benefits of HB1268 (O.C.G.A. 33-24-46). I have
the benefit of 30 days if my company decides I am no longer needed. What
can an agent do? What I would like to see is an amendment to the
“Unfair Trade Practices Act” making our contracts with insurance
companies fair to the agent if they choose to cancel their contracts.
Can anyone be against agents doing business fairly? When
I have told that to some agents, they tell me I shouldn’t be doing
business with any company that would not do business fairly. Remember
what I said about the company I started with 20 years ago at 15% ...
built up a large book of direct bill auto and now get an average of less
than 10% on the book? How many companies do you know that have merged,
been sold, changed market direction, etc., in the last five years?
Companies change and unfortunately agents are not part of the decision. What
can you do? First, I do not expect most agents to be out front on the
need to get some agents’ protection as I have been during the last 12
years. Three little words best explain most agents’ reluctance to get
involved: Fear,
Fear, Fear. I
used to have a plaque that had on it “The Golden Rule” and it said
“He who has the gold makes the rules”. Just remember, however, that
agents, as a group, are more respected than insurance companies (and
banks, too!). If 50,000+ Georgia agents decided they wanted to make
changes, all the company gold in the world couldn’t stop them. Unlike
a few companies, agents speak kindly about insurance companies. That
could change. When
I was in the Legislature, the Legislators who displayed the most
dissatisfaction with insurance companies were former insurance agents.
Look around your town and you will find people who dislike us most
(because to them we ARE the insurance company) are former insurance
agents. One
way we can become insulated from the direct confrontation between agent
and company is to have strong agents’ associations that will represent
the agent. I belong to the GIAA and PIA of Georgia. I have let it be
known to both associations that I will not continue to pay them dues
unless I can expect them to represent agents first and foremost.
Insurance companies have their own associations. While we want companies
to be a part of our associations, if the issue is one where the company
and agents’ interests are in conflict, I want my association to be on
the agents’ side. So
far I have not mentioned the name of any company. However, at this point
I feel the best way I can explain why agents need help is to talk about
what is happening with Mendota Insurance Company. If you have been
reading the FYI, you know about the contract dispute. They unilaterally
changed the contract (remember the 30 days?).
They bought a company, sent out a new contract and said “sign
or you no longer represent us immediately).
The contract was for a lower renewal commission. When my good
friend Hoke Rawlins changed the contract to reflect what he felt he
needed to operate (15% renewal instead of 12½%), Mendota sent it back
registered return receipt with a not-too-polite message about signing or
else. Because Mendota was buying the book of business (or expirations,
they say), in several states, the National Auto Agents Alliance became
involved. NAAA asked for a meeting with Mendota where they wanted to
represent agents in Texas, Tennessee and Georgia. I am happy to say that
GIAA is to become a part of NAAA this coming January. NAAA has a record
of representing agents’ interests with the insurance companies ... we
pay our dues and they represent us. When NAAA tried to negotiate with
Mendota, the company told NAAA they did not negotiate with associations
- only with agents. Hoke Rawlins is an agent and they wouldn’t
negotiate with him. In other words, they have the gold and they make the
rules. I feel they have made a decision they will soon regret. In
many states, Mendota is a well known company. It has an A+ rating and is
part of the same group of companies to which Northland Insurance Company
belongs. Most of us are familiar with Northland but not Mendota. Last
year, ownership changed to Associates Financial ... a large finance
company (he who has the gold!) Citicorp buys Travelers, etc., etc. Does
anyone believe the money people aren’t wanting to control the
insurance marketplace? Mendota
did nothing that a lot of other companies have not done. They only did
it wrong. I have actually had some companies lower my commissions and
had me feeling sorry for them. Mendota should have waited until they
were a well-known, respected company in Georgia to take actions. They
could have started with 15% ... a year later changed it to 12% ... a
year after that 10% ... a year after that taking the business in-house.
(Mendota now does business direct). Poor planing on their part, would
you not say? What
really hurts about the Mendota situation is that a lot of agents did
business with Alexander Underwriters for many years and considered the
Alexander's friends. Jim Alexander was and is a success story. He
started International Indemnity in Georgia and took it into many states.
Jim sold to Queensway who renamed it the Sun States Insurance Group. Now
Sun States wants to hand your business over to Mendota. remember what I
said about companies making changes? How can anyone, including insurance
companies, not feel that agents need help? Last,
I am asking all agents to become involved with agents’ associations.
If the agents’ association that you belong to does not wish to help
you with Agents’ Rights, change them or change associations. |
