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Agency Agreement Review Service

Looking for guidance on agency agreements? PIA offers a review service for agency agreements to both members and carriers. To use PIA's agency agreement review services, first read the material below so you understand PIA's process. Then please contact Lauren Pachman, Counsel & Director of Regulatory Affairs at (703) 518-1344 or

Why Is an Agency Agreement Review Necessary?

Agency agreements define the relationship between a particular carrier and the independent agents that take the carrier's product to the public. As is the case with many legal documents, agency agreements can often contain ambiguous, confusing, and outdated provisions. Coupled with unforeseen market changes and new statutory, regulatory and case law, the provisions of an agency agreement may unwittingly misstate the legal obligations of both the carrier and the agent in the contract. In today's compliance crazed industry, misunderstanding one's obligations can spell the difference between a thriving agency and one that struggles to stay afloat. To help combat this problem, PIA continues to offer its agency agreement review service to both carriers and member agents. By working together with these parties, PIA strives to improve not only the legal document, but also the business relationship between carrier and agent.

The Goal of the Agency Agreement Review Service

PIA's goal for agency agreements can be simply stated with three terms: flexibility, clarity, and fairness. Flexibility is needed so that an agency agreement can withstand drastic changes in the insurance market due to unforeseen occurrences like acts of terrorism and the shifting climate of federal and state laws and litigation that require changes in the way carriers and agents perform their duties. Flexibility can be achieved, but only through careful planning and the proper drafting of an agreement.

Clarity is also necessary to have an effective agreement. All too often, people are intimidated by the "legalese" that permeates legal documents. They do not understand what they read and sign legally binding documents without knowing exactly to what they are obligating themselves. PIA recognizes this phenomenon and works diligently to clarify the language of an agency agreement. Language that clearly and simply defines both parties' obligations under a contract is necessary to ensure that each party can live up to those obligations. This clarity can be achieved by replacing confusing verbiage with straightforward language.

Finally, fairness is necessary in an effective agency agreement. Contracts are often viewed with skepticism and suspicion. Each party wonders if the other is attempting to take advantage of the other with misleading or ambiguous language. By simplifying the language and obligations in an agreement and educating agents about their construction and implementation, PIA's review service alleviates this problem and helps to create a flexible, clear and fair agreement.

The Service Itself

The response from member agents and carriers in the years that PIA has offered the agency agreement review service has been overwhelming. This reinforces the belief of PIA that the service is not only an important benefit, but one that has reached its intended recipients and provided great value to their respective businesses. In order to continue to meet the needs of PIA members in a timely fashion, PIA utilizes the following structure for the agency agreement review process.

The Review Process for PIA Member Agents and PIA Affiliates

Member agents are encouraged to participate in the agency agreement review service if they have recently been issued an agency agreement from a carrier or have particular questions about an existing agreement. However, because of the number of agreements that have been submitted in the past, we ask that members submit their most pressing agreement only. Priority will be given to those agreements that are about to enter the market over agreements that have already been signed and are effective. If a full review is granted, PIA will prepare a sectional analysis of the agreement and present it to the appropriate carrier for consideration. PIA and the carrier will then work together to improve upon the contract through a series of communications and exchanges of suggested improvements. Upon completion of a review, PIA will send to the submitting member a copy of the final review, along with the Guide to Agency Agreements. This guide will educate members on the process and will enable them to review agreements on their own in the future.

Before sending an agreement to PIA, the agent must first decide whether or not they are interested in the business relationship with the carrier. If so, the agent should read the agreement and note any questions or comments. At that point, the agent should send an electronic copy of the agreement to PIA. The agent should also include with the submission:

  1. Whether the contract is newly issued;
  2. The contract's effective date;
  3. If newly issued, whether or not it has been signed;
  4. If not signed, the signing deadline;
  5. If newly issued, the date of the carrier's last version of the agreement;
  6. Contact information for the carrier;
  7. Any provisions of particular concern, along with any questions or comments; and
  8. The history with the carrier and any other relevant information concerning the carrier.

Please note that only priority agreements will qualify for the full review process due to the number of agreements that are regularly submitted. That is not to say that others will be set aside. Instead, PIA will review all other submissions and questions and will return a prompt response to them, but they will not garner the full process of review. In this way, PIA can best serve the needs of all members in a timely fashion.

The Review Process for Carriers

PIA encourages carriers either in the process of updating their agreements or simply feeling the need to analyze their agreements to submit their current or prospective agency agreements for review. Carriers must, however, commit to the entire process. This exercise not only helps both PIA and the carrier to understand the business factors involved, it fosters an atmosphere of working together for the benefit of all parties. Remember, this is not an adversarial process. It is one designed to work to the benefit of both carriers and independent agents by seeking to create the most simple and legally sound agreement possible for the given situation.

If a carrier decides to participate, the first step in the review process is a thorough analysis of the agreement. PIA will draft an initial review highlighting both the positive and negative aspects of the agreement. This in-house review will be completely confidential. PIA will then submit its initial section-by-section analysis to the carrier recommending language changes where appropriate. The carrier is then encouraged to consider the suggestions submitted to them and to contact PIA to set up either a visit or conference call. At this meeting, PIA and the carrier will discuss in detail the agreement and its surrounding business issues.

Following this meeting, PIA will provide the carrier with a copy of the Guide to Agency Agreements to aid in the drafting of a new agreement or in the editing of an existing document. Depending on the number and nature of issues raised in the initial draft review, the carrier may submit a revised agreement, which will also be reviewed by PIA. This second review would also be confidential. Or, the carrier may issue its final version of the agreement with comments on changes made and language that was retained from the initial agreement. When PIA receives the final version of the agency agreement from the carrier, and it is clear that no further changes will be made, PIA will then complete its final review of the agreement.

The final review will address our initial draft review, changes that were made and those that were not throughout the various drafts submitted during the review process, comments made by the carrier, and PIA's comments on the final draft of the agency agreement. This final review will be sent to the carrier. The carrier will be given an opportunity to respond to this final review if they desire. The final review will be made available, upon request only, to PIA member agents and affiliates who are considering or already have a business relationship with the reviewed carrier.

Other General Considerations

It is important for all parties involved in the process to keep the following facts in mind:

  1. PIA does not recommend any action to their members as to whether they should or should not sign an agency agreement;
  2. PIA does not post its agency agreement reviews on the PIA website;
  3. The agreement review does not take the place of direct discussions between an agent and a carrier;
  4. The PIA Agency Agreement Review Service does not constitute the provision of legal services or legal advice, and provision of this service is not a substitute for legal counsel. The information conveyed in the course of an Agreement Review is not intended to create, and receipt of said information does not create, an attorney-client relationship. Recipients should not rely or act upon the information provided without seeking professional legal counsel. PIA strongly encourages each agent to consult their attorney regarding their specific circumstances and obligations and compliance with the law of the state in which the agent operates; and
  5. PIA does not endorse or condemn agreements in the review.
  6. Finally, a carrier may note that PIA National was asked to review its agreement, but it may not, under any circumstances, state, imply, or create the assumption that PIA has "signed off" on, or is in support of, the agreement.

To participate in this valuable service, please send an electronic copy of your agreement to Lauren Pachman, Counsel & Director of Regulatory Affairs at (703) 518-1344 or