§ 27-2.4-20 - Revocation or modification of insurance producer's contract – Procedures.
SECTION 27-2.4-20
§ 27-2.4-20 Revocation or modification ofinsurance producer's contract – Procedures. – (a) No company shall cancel the authority of an insurance producer, if theinsurance producer is not an employee of the company, and no company shallmodify a contract with that insurance producer unless the company gives writtennotice of its intent to cancel that insurance producer or its intent to modifythe contract at least one hundred eighty (180) days before the proposedeffective date of any cancellation or at least one hundred eighty (180) daysbefore the proposed effective date of any modification. No company shall allowthe license of that insurance producer to expire unless the company giveswritten notice of its intent to do so at least one hundred eighty (180) daysbefore the proposed effective date of expiration because of cancellation.Except as otherwise provided in this section, any insurance producer receivingnotice of cancellation, modification, or expiration may, within sixty (60) daysafter receipt of the notice, make a written demand for reference to three (3)referees of the question as to whether or not the cancellation, modification,or expiration will affect the renewal, continuation, or replacement of anypolicies placed with the company through the efforts of the insurance producer,or the services needed by any policyholder doing business with the company as aresult of the efforts of the insurance producer, as to justify renewal orcontinuation of any policies then in effect having been placed with the companyby that insurance producer. In the event the referees find that thecancellation, modification, or expiration will affect the renewal,continuation, or replacement of any policies placed with the company throughthe efforts of the insurance producer, or the services needed by anypolicyholders doing business with the company as a result of the efforts of theinsurance producer, then the referees shall order continuance or renewal of anypolicies expiring within a period of twelve (12) months of the issuance of thenotice, at a rate of compensation to the insurance producer equal to that asprovided in the agreement expiring or being cancelled or modified, for oneadditional policy period equal in length to the most recent policy period ofthe expiring policy, but in no event for more than one year. The referees shallnot order continuance or renewal of any policies if they find that the reasonfor the cancellation or expiration of the agreement by the company waslegitimately based upon one of the following grounds:
(1) The insurance producer was convicted of a dishonest actrelated to his or her occupation as an insurance agent;
(2) The insurance producer's license to engage as aninsurance producer was revoked; or
(3) The company surrendered its license to do business in thestate.
(b) An insurance producer making a written demand for areference shall accompany the written demand with the names and addresses ofthree (3) persons, where the company shall, within fifteen (15) days, notifythe insurance producer of its choice of one of the persons to act as one of thereferees and at the same time submit the names and addresses of three (3)persons to the insurance producer, who shall, within fifteen (15) days afterreceiving these names, notify the company in writing of his her choice of oneof the persons to act as a second referee. At the same time the insuranceproducer shall notify the commissioner, the notice to be on a form prescribedby the commissioner, that both the company and insurance producer have chosenreferees. Within ten (10) days of the receipt of this notice the commissionershall appoint a person to serve as third referee, and shall notify that person,the insurance producer, and the company in writing of this appointment. Eachperson nominated or appointed as a referee shall be a disinterested person,shall be a resident of the state, and shall be willing to act as a referee.Within ten (10) working days of the appointment of the third referee, who shallserve as chairperson, the three (3) referees shall meet, hear evidence, andreduce their decisions to writing and sign it, and shall deliver a copy of thedecision to the insurance producer, to the company, and to the commissioner. Inthe event any company receiving a written demand for a reference fails tocomply with the provisions of this subsection, then the insurance producershall have the authority to renew or continue any policies placed with thatcompany through the efforts of the insurance producer expiring within a periodof thirteen (13) months from the date of the notice of cancellation,modification, or expiration of the agreement, at a rate of compensation to theinsurance producer equal to that as provided in the agreement expiring or beingcancelled or modified, for one additional policy period equal in length to themost recent policy period of the expiring policy, but in no event for more thanone year.
(c) Any insurance company and any insurance producer may bywritten contract agree to modify the provisions of subsections (a) and (b) ofthis section other than the requirement of a one hundred eighty (180) daynotice in the event of cancellation or a one hundred eighty (180) day notice inthe event of modification of a contract or of intent to allow the expiration ofa license, by provisions presented to and approved by the commissioner which heor she finds after due hearing and investigation will adequately protect boththe right of the policyholder to a continuance of insurance and the services ofany insurance producer of his or her own choosing and the right of theinsurance producer to fair compensation for the insurance placed with a companyas a result of the insurance producer's efforts. The commissioner may makereasonable rules of general application regarding these modified provisions.
(d) The decision of the referees may provide for the renewalor continuance of any or all policies expiring within a period of twelve (12)months of the issuance of any notice, at a rate of compensation to theinsurance producer equal to that as provided in the agreement expiring or beingcancelled or modified, for one additional policy period equal in length to themost recent policy period of the expiring policy, but in no event for more thanone year. The decision of the referees may also provide for the continuance ofprevious contractual provisions, if the referees, or a majority of them, findthat the decision will best protect the right of a policyholder to acontinuance of insurance and the services of an insurance producer of his orher own choosing and the right of any insurance producer to compensation forthe insurance placed with a company as a result of his or her efforts, givingdue consideration to the possibility the affected insurance producer has ofobtaining similar coverage for policyholders affected from other companies atreasonable compensation. The decisions rendered in accordance with theprovisions of this section providing for reference shall be binding on allcompanies and insurance producer affected by those decisions. If a decisionorders the renewal or continuance of any policies, policyholders and theaffected insurance producer shall be entitled in all respects to the sameservices and practices as were in effect prior to reference insofar as amountsand types of coverage, credit terms, commissions paid to the insuranceproducer, and insurance producer services are also continued.
(e) All policies expiring within twelve (12) months of thenotice may be renewed for the policy periods as provided in subsection (d) ofthis section, but no insurance producer or company relying on this sectionshall again refer the same issue to referees. Where other provisions of thegeneral laws require notice to policyholders before non-renewal of anycoverage, the company shall, at the request of the insurance producer who isunable to replace any policy which has been renewed for one or more policyperiods in accordance with this section, comply with those provisions of law.
(f) An insurance producer initiating reference under thissection and the company receiving written demand shall each be liable for thepayment of the reasonable charges and expenses of his or her nominee forreferee and one-half ( 1/2) of the compensation for the reasonable charges andexpenses of the third referee. The third referee shall upon the execution ofthe decision furnish the insurance producer and the company with a writtenstatement specifying in detail his or her charges for compensation andexpenses. The insurance producer or the company, if aggrieved by these charges,may petition the commissioner for review. The petition shall set forth withparticularity the specific item or charges in dispute. The commissioner shall,within ten (10) days of receipt of the petition, notify the interested partiesof the date established for a hearing on the petition and, after the hearing,the commissioner shall approve or disapprove the charges in whole or in part,his or her findings and decisions shall be final and conclusive.