The Agents Council for Technology (ACT), which is affiliated with Alexandria, Va.-based Independent Agents & Brokers of America, has published Guidelines for Effective Agent-Carrier Technology Agreements, a report that can help independent agents and brokers as well as carriers 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 agreementswhere they existhave 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 agreementscomplex, 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 issues 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.
- Access should be limited 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.
- Agreements should clearly explain the appropriate sharing of data. 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.
- Current access rights of active and terminated agents should be reassessed. Current technology agreements typically allow for the immediate termination of access to a carriers Web site as soon as an agents relationship with a carrier ends or a new agent of record letter is received. ACT believes this practice is not in line with todays business needs.
- Warranties and indemnification should be reassessed. 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 agencys use of the carriers system causes the carrier damage. The ACT report argues that such one-sided indemnification provisions discourage agents from using carrier technologies.
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.
Source: Independent Insurance Agents & Brokers of America
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