If you are a business owner interested in acquiring insurance, then you may have come across an insurance producer agreement. Some insurance agencies may require it, but ultimately, it is a part of insurance that should be thoroughly understood. The agreement often comes in three main parts which include the employment agreement, compensation agreement and the vesting provisions.
1. Employment Agreement
The employment agreement outlines the business conduct between the insurance agency or producer and the company hiring the agency. It outlines the responsibilities of both parties as well as the type of conduct that is acceptable and unacceptable.
2. Compensation Agreement
The compensation agreement focuses primarily on commissions paid between the producer and the company. Outlining the exact amount of commissions the company owes the producer is a vital part of the insurance producer agreement. This eliminates any and all gray areas that may interfere with the coverage offered by the producer.
3. Vesting Provisions
Vesting provisions refer to the conditions for termination, such as the specific amount of days required for advance notice and any penalties undertaken for violating those terms. It is an important part of the agreement for both parties to understand. Having this clearly specified will reduce any future confusion when it comes to the kind of services offered.
Understanding the specific actions that are allowed and are not will make the working relationship between producer and company easier to understand. Fortunately, the insurance producer agreement strives to do just that for your business and the insurance agency you choose to utilize.