Duration and Termination of Agency Duration and Termination of Agency The relation of principal and agent can only be terminated by the act or agreement of the parties to the agency or by operation of law. The timeframe for termination of an agency can be stipulated by a particular statute or instrument. In such a case, if the instrument specifies in plain and unambiguous terms that an agency will terminate without action on the part of the principal or agent upon the expiration of the time specified in the instrument, the agency will in fact, terminate[ii]. If, after the expiration of the time so stipulated in the contract, the parties continue their relationship as principal and agent, a rebuttable presumption is raised that their relations are governed by the original contract and that the contract is renewed for a similar period.
These issues require discussion of: State statutes; Applicable case law in each state. A state-by-state breakdown of the findings follows below: According to the Second Restatement of Agency, a principal has a duty not to repudiate or terminate an employment in violation of the contract of employment 5A.
Thus, where insurance agent, who had been terminated for failure to give his insurers first priority in placing insurance, engaged in competitive activity shortly after his contract was terminated, agent forfeited his right to service bonuses, uncollected commissions, and renewal commissions, where contract had provided for such forfeiture if agent engaged in competitive activity within one year of termination.
Anderson v Farm Bureau Mut. Co Idaho ; P2d Generally, it may be said that the right of an insurance agent to recover commissions on renewal premiums depends upon the contract existing between the agent and the insurance company or one of its general agents. In order for the agent to be entitled to recover commissions on renewal premiums from an insurance company, it would be incumbent on him to show that the agency was indeed with the instant insurance company, and that all the conditions precedent to his right to such commissions had been performed.
A large number of cases have discussed the right of the agent to recover renewal commissions after termination of the agency.
It may be stated as a general rule that unless the contract of an agent provides for commissions on renewal premiums paid after the termination of his employment, he will not be entitled to such commissions after his agency has been rightfully terminated.
In some cases recovery has been allowed, whereas in others recovery has been denied. It has been held that an agent who was entitled to commissions on renewal premiums could not be deprived of his right of recovery by his wrongful discharge.
Under the particular terms of the agency contract it has been held, in a number of cases, that an agent was entitled to recover commissions on renewal premiums paid after the rightful termination of the agency.
The courts have usually given effect to a provision that in the event of termination the insurance company may deduct a certain percentage from the renewal commissions for a service or collection fee where the agent himself does not collect the premiums.
In the absence of provision for payment after termination, there has been found to be a general rule denying recovery: It may be stated as a general rule that unless the contract of an agent provides for commissions on renewal premiums paid after the termination of his employment, he will not be entitled to commissions on renewal premiums paid after his agency has been rightfully terminated.
Differences among individual states with regard to this area of insurance regulation are discussed below.
The essential elements for appointment and termination of agency contract in state of Alabama are contained in Section in the code of Alabama. An insurer or authorized representative of the insurer that terminates the appointment, employment, or contract with a producer for any reason shall within 30 days following the effective date of the termination, using a format prescribed by the commissioner, give notice of the termination to the commissioner.
Each insurer shall give its producers timely written notice of all appointments and renewal of appointments. The provision in an agency contract permitting termination without cause is consistent with express Arkansas law; extending the employment law public policy exception to independent insurance agents would effectively nullify the termination-without-cause provision in such a contract, contrary to this express statutory authorization.
Security Benefit Life Ins. There are exceptions to license requirements under Arizona law governing Insurance issues. An insurer is not required to have the license. Section gives exceptions to license requirements for producers or special agents provided they do not receive any commissions on policies written or sold.
A license continues to be in force according to Sec. The machines are to be used only if the kind of policy sold by the machine does not pose a risk of harm to the public. The authority of the producer to use such such vending machine is to be displayed near the machine and this right can be subject to revocation, suspension or termination by the director.
An insurer or insurance producer shall not pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this Acc.
Once the license is withdrawn for any of the reasons, the license is to be returned to the director. An insurer or insurance producer shall not pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in this state if that person is required to be licensed under this article and is not so licensed.
Other subsections of this statute refer to the few types of commissions like payment to employees that are made available to individuals dealing in the business of insurance. The licensee gets the authority to transact as an agent on the day of signing the appointment notice.
This authority of licensee shall stay in effect until cancellation or expiration of license and the filing of a notice of termination by the insurer or employing fire and casualty broker agent.
Upon termination of such appointment and cancellation of the bond with the licensee, the permanent license becomes inactive. Such a license cannot allow a person to transact in a field where a valid license is required.
With regard to post termination payment to an agent, the following cases would clarify the position with regard to the importance of the terms of the contract between the agent and the insurer.
Parties to a contract may provide therein for their respective rights and liabilities in the event of the termination thereof. In Barr v Sun Life Assur. All additional information is to be given by insurer to commissioner in prescribed format. Copy of notification to be given to producer within 15 days of making it.Termination of Agency by Act of the Parties.
An agency can be terminated by the act of the parties in any one of the following ways.
Termination of Agency Contract Termination of agency may take place in two ways either by the operation of law or by the act of parties. Termination of . Termination of Agency “By the act of the parties” By the act of the parties, there are 2 ways of termination of agency can be done.
The first is the agency contract can be terminated by mutual revocation. Upon termination of employment, Consolidated Omnibus Budget Reconciliation Act (COBRA) Health Insurance Portability and Accountability Act (HIPAA).
For information on health insurance coverage under the Family Medical Leave Act (FMLA) upon termination, see 29 CFR (f). Duration and Termination of Agency The relation of principal and agent can only be terminated by the act or agreement of the parties to the agency or by operation of law.
“An agency, when shown to have existed, will be presumed to have continued, in the absence of anything to show its termination, unless such a length of time has elapsed as.
(a) Termination by act of parties: A contract of agency may come to an end by the act of the parties as follows: 1. By agreement: An agency is generally created by an agreement, it may also be terminated by an agreement so far as future transactions are concerned.