ACT Report TACKLES AGENT-CARRIER TECH PACTS
Report Finds Agreements Not Keeping up with Technology
ALEXANDRIA, VA, May 11—The Agents Council for Technology (ACT) has published Guidelines for Effective Agent-Carrier Technology Agreements, a comprehensive report that will help independent agents and brokers as well as carriers apply key principles to identify issues to address in technology agreements.
These agency-carrier technology agreements supplement agency agreements by detailing electronic interaction expectations between agents and their insurance company partners.
In its analysis, ACT concludes that technology agreements—where they exist—have not kept up with the new electronic relationships that are being forged today between agencies and carriers. Specifically, these agreements are widely varied in the scope of issues they address, and many seem to be adapted from technology software agreements—complex, full of technical jargon, and difficult to identify the key commitments being made by each party.
“Given the increase in electronic interactions between agents and carriers, it is imperative that these technology agreements simply and clearly outline the major responsibilities of each party and be consistent with the underlying agent-carrier relationship and agreement,” says Roy Riley, chief operating officer of Peel & Holland, Benton, Ky., and chairman of the ACT work group that developed the report.
Key principles discussed in the report include:
- Only Authorized Parties Should Be Permitted to Enter into Such Agreements
Where online technologies are used to present and execute such agreements, carriers should assure that only authorized agency personnel are permitted to execute the contract. “Otherwise, any agency employee is likely to accept the click-through agreement without reading it and set up an agency policy to assure compliance with the commitments agreed to by the agency’s staff,” says Jeffrey M. Yates, ACT executive director. “We must not lose sight of the fact that understanding and complying with the contract’s requirements are the major reasons to have it in the first place.”
- Limit Access to Authorized Users
Agreements should ensure that agents actively manage the log in privileges for agency personnel, that access is limited to authorized users, and that access by terminated employees is cut off immediately.
- Using Electronic Data and Other Carrier Information
The report recommends that technology agreements clearly explain what kinds of information on carrier Web sites agents can and cannot be shared with customers and other third parties. Some agreements go too far in restricting agency use of information, providing that the carrier “owns” all the software and Web content (presumably including electronic policy and client data) and prohibits agents from sharing any of this content with third parties. “An agency can use client and policy data if it obtains this information from a download, a paper policy or a phone call to the carrier,” says Yates. “Why should it be any different if the agent accesses the data using a Web site?”
- Access to Electronic Client and Policy Data by Active and Terminated Agents
Current technology agreements typically allow for the immediate termination of access to a carrier’s Web site as soon as an agent’s relationship with a carrier ends or a new agent of record letter is received. ACT believes this practice is not in line with today’s business needs. “We feel technology agreements must provide agents with continued, limited access to client and policy data in case a situation arises for an agent to retain such information,” Riley states. “The complete policy information should be available in a usable format in the event an agent is called upon to produce documents for legal or administrative proceedings after the agent’s formal relationship with the carrier has ended.”
- Warranties and Indemnification
The report also notes that most technology agreements provide agents with little or no recourse should carrier systems or downloads cause damage to agency systems. In contrast, some agreements require the agent to indemnify the carrier in the event that the agency’s use of the carrier’s system causes the carrier damage. The ACT report argues that such one-sided indemnification provisions discourage agents from using carrier technologies. A balanced approach, where each party is responsible for protecting its own systems but commits to using best efforts to correct problems affecting the other party, is preferable.
On a related issue, Yates adds: “This new ACT report argues that agents should be able to rely on client and policy data available on a carrier’s Web site in the same way they can rely on information contained on a paper policy or received from a phone call with the carrier. Carriers should continue to indemnify for agency losses caused by an agency’s reliance on data obtained from the carrier that turns out to be incorrect, including data that resides on the carrier’s Web site.”
To obtain more detailed information and additional key principles for effective technology agreements, please view the report in its entirety at www.independentagent.com/act.
Established in 1999, ACT provides a candid, action-oriented forum for agent and industry associations, user groups, companies and technology vendors to address critical technology and workflow issues facing the independent agency system.
Founded in 1896, IIABA is the nation’s oldest and largest national association of independent insurance agents and brokers, representing a network of more than 300,000 agents, brokers and their employees nationally. Its members are businesses that offer customers a choice of policies from a variety of insurance companies. Independent agents and brokers offer all lines of insurance—property, casualty, life and health—as well as employee benefit plans and retirement products. Web address: www.independentagent.com.
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