By: AgencyEquity.com
After more than 40 years of representing a carrier, a captive insurance agent’s contract was terminated. Believing that he was terminated because of his age, he sued the carrier.
The agent had sold the carrier’s policies in Kentucky since 1977. According to him, in the years before his termination other agents and carrier employees had begun suggesting that he consider retiring or that he review his retirement benefits. However, he intended to remain in the insurance industry “indefinitely.” To that end, he had a “new state-of-the-art office building, at a cost of hundreds of thousands of dollars” constructed. He claimed that he did this with the carrier’s “knowledge and support.”
The carrier notified him in late October 2020 that it was terminating his contract immediately. The letter arrived “without warning” and demanded the return of carrier records and property. The carrier rejected his request for a review, stating that he had “violated [its] policies during an interaction with a single customer relating to her requested policy transfer.” They also said that he had refused to meet with agency leadership via Skype to discuss the situation.
His version of events differed. He claimed that the individual in question was a disgruntled former employee of his. The individual subsequently complained about him to the state insurance department. The department investigated and found the complaint to be without merit.
He also claimed that, rather than refusing to meet with agency leadership, he sent several emails requesting an agenda for the proposed meeting. The technology the carrier had provided his agency made using Skype difficult, he said.
He filed suit in August 2021, accusing the carrier of:
●Terminating him without good cause and in bad faith.
●Depriving him of retirement benefits they owed him.
●Hiding its intent to terminate him while he built the new office.
●Making representations that entitled him to reimbursement for the construction.
●Violating the Kentucky Civil Rights Act by discriminating against him because of his age.
●Slandering him by publicly mischaracterizing his interaction with the dissatisfied customer.
●Enriching itself at his expense.
●Imposing a one-sided contract.
He requested compensation and punitive damages.
He argued that he was a “de facto” employee of the carrier’s even though the agency contract clearly identified him as an independent contractor. The court’s opinion noted the contract’s termination provisions including payments due him upon termination.
In November 2021, the judge rejected all of his claims. While he found it plausible that the agent might have been an employee, rather than an independent contractor, he found no basis for the age discrimination claim. The agent had not identified specific carrier employment practices that would tend to disproportionately impact older employees. He admitted that the contract permitted either party to terminate it at will.The judge found no breach of contract regarding the retirement benefits, and nothing indicating that the agency could have relied on the contract as a promise to retain him after he built the office. He ruled that a notice by the carrier that the agent was no longer affiliated with them was not slander. The other claims fared no better.
When a carrier signs an agreement with any agency, captive or independent, the agent should anticipate that the carrier will do what the contract requires but nothing more. This agent appeared to believe that longevity and the construction of a new office would protect him from termination. The contract did not require the carrier to consider those things, and they didn’t. They had the right to terminate his contract when he was age 72, regardless of how much money he put into the building.
Agencies should know exactly what a contract with a carrier requires both parties to do. They should hold carriers accountable for meeting their obligations under the contracts, but they should not expect anything more.
