Agency principals need to be aware of the agent/carrier technology agreements that their staffs may have agreed to using a click-through interface. In addition, agency principals should strive to sort out the important contractual commitments in these agreements from the rest of the complicated, software-related necessities.

In order to promote increased understanding and compliance by both parties, agreements must be kept as simple as possible. Here are some suggestions:

Focus on key business principles and handle instructions and procedures using a separate procedures document.

If online-agreement technology is used, then the carrier should make it very clear that only authorized representatives of the agency can commit to the agreement.

It is also very important for the agency, after it reviews its commitments, to implement necessary policies and procedures to assure that the agency complies with the requirements and keeps up with training employees on policies and procedures.

Another key principle in technology agreements is to spell out each partys responsibility to limit access to authorized parties. Agency personnel should be instructed to keep their passwords confidential and not share them with any other party. This principle is also fundamental to the agencys security protection of its own systems.

The agency systems administrator should actively manage the logon privileges for that particular agency and ensure that the access of former personnel is terminated immediately.

o The technology agreement and carrier Web site should also clearly spell out what information and data on the carrier site the agent is permitted to use and share with other parties for marketing, underwriting and loss control, etc. Any restrictions on agency use of information on the carrier site should be clearly spelled out for all agency personnel to see.

Technology agreements typically suggest that agents are largely responsible for errors and problems that occur in their own systems as a result of the actions of the carrier or its systems (such as sending corrupt download files). Therefore, agents should take reasonable steps to protect their own systems from such damage. Carriers should agree, however, to have a sense of urgency in correcting problems when they are found and in communicating the problem to all affected parties.

While many carriers specifically disclaim any responsibility for damage caused to the agent's systems, they then require the agency to indemnify for damages that it may have caused to the carrier's systems under certain circumstances. Such one-sided provisions are unfair to the agent and discourage agents from embracing the new technologies that carriers provide. Rather than using such a biased indemnification provision, a far better approach would be for the carrier to assume the same responsibilities to protect its systems as it expects of its agents and to impose upon its agents the same requirement to fix problems promptly when they arise.

At the end of the day, technology agreements should respond to the needs of both agents and carriers in a balanced manner, avoiding complex and difficult to understand language.

Roy Riley, CPCU, is CIO and CFO of Peel & Holland Financial Group in Benton, KY, and past president of the AMS Users Group.

Reproduced from National Underwriter Edition, June 11, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.