Owning Your Customer Information

For a long time, independent agents assumed that they “owned” their expirations, which in the minds of most agents meant that they had exclusive rights to and use of customer information. Because renewals are such an important part of agency income, that customer information usually had significant value in an acquisition or sale of an agency. Since the information was shared with insurance companies and general agencies, most agreements between these parties recognized the rights of the agent after the agreement was terminated by either party, as long as the agency did not owe the other party money. But not all agreements are created equal and the understanding of the parties to the agreement can differ. One company in Texas terminated the agency agreement and then contacted the agency’s customers pointing them to another agency in town that represented them, claiming that the “ownership of expirations” guaranteed in their agreement applied only to file information produced by the agent and not to the list of customers.

Agents should carefully review agreements for protection of this important agency asset and seek clarification from the parties about the use of customer information in event of termination of the agreement. It is usually better for the agreement to address use of the customer information rather than ownership of such information. Exceptions to this exclusive use provision should be specific and clear. Below is sample language provided by the Independent Agents & Brokers of Pennsylvania. It is offered solely as a guide and is not a substitute for independent evaluation of all provisions included in a contract. The services of an appropriate attorney should be sought before signing any agreement.

 Agent shall retain the exclusive ownership, use and control of “policy expirations” and customer lists, including direct-bill business, the records thereof and Agent’s work product, and Company shall not use its records in any manner which abridges Agent’s right of exclusive ownership, use and control of these expirations, except as provided in this Agreement.

In the event of Agent’s failure to pay to Company any and all premiums due Company, then the ownership, use and control of all such policy expirations and customer lists, and all right, title and interest in and to the records thereof, including any insurance which was submitted by Agent pursuant to Company billing procedures, shall immediately become vested in Company. With respect to nonpayment of premiums, Agent shall have the right to cure such default by furnishing collateral security acceptable to Company within ten days of default, in terms of type and amount to be held by Company until the indebtedness is satisfied.

Company may, in its discretion, sell at private or public sale such expirations and records, and if the company does not realize sufficient funds to fully discharge Agent’s indebtedness to Company, Agent shall remain liable for the balance of the debt owed to Company. Any amount realized by Company in excess of Agent’s indebtedness to Company, after deduction of the expenses of selling such expirations and records, shall be returned to Agent. A minor difference of opinion with respect to the balances owed by Agent does not constitute a failure to pay and does not have the effect of vesting title to expirations in Company provided Agent pays the amount not in dispute .

This section governing Agent’s ownership of expirations shall survive this agreement.