If there is one constant philosophy found in the legislative process, it is a strong reluctance by lawmakers to interfere in the contractual relationships that form a crucial part of the underlying structure upon which an industry is built. This is seen not only in the legal agreements between companies and consumers, but also between the legal relationships between the parties within the same industry. This public policy position was on full display when the House Insurance Committee recently debated a bill, which would have required insurers to give agents a 120-day notice when it decided to terminate their contract. Additionally, the 120-day notification provision could not be decreased per the terms of an agreement between an insurer and an agent, as is the case under current law.

Background

The Department of Financial Services reported that currently there are 191,511 licensed agents in Florida, which hold appointments from some two million companies to issue policies in the state. The agents' breakdown into two classes, independent agents that hold multiple appointments from carriers, and so-called captive agents that represent a single carrier. In the case of independent agents, there is no statutory limit on the number of insurers the agent may represent. All appointments must be renewed every two years unless they are suspended, revoked, or terminated. Captivated agents operate under the same terms, although with few exceptions they can only sell one carrier's products. Typically, when an agent enters into an agreement with an appointing carrier to market its products, the two parties negotiate the terms of the contract, which includes commission levels, expectations of services, and other items.