Shaking Hands With Strangers? Producer Agreements Need Revamping
While most insurance industry executives appropriately examine, negotiate and conduct due diligence prior to entering into a new business arrangement, they almost never think twice about signing a flimsy, one or two page contract with insurance brokers collectively valued at tens of millions of dollars. In essence, such contracts amount to nothing more than a handshake–with a stranger.
Most of todays producer agreements or notices of appointment in the insurance industry have become so boilerplate and perfunctory that they have lost their effectiveness. The legal relationship and obligations between insurance companies and brokers is typically so unclear in a producer agreement that both parties are overexposed and underprotected if a dispute arises.
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