As printed in
the February 1st issue of "Illinois Insurance," the bi-monthly
newsletter of the Illinois Department of Insurance, the Illinois Insurance
Code prohibits an insurance company from terminating a policy of property
& casualty insurance on the grounds the producer's contract has
been terminated (215 ILCS 5/141.01). In addition, 215 ILCS 5/141.02
gives the insurance producers the right of renewal for one policy
period following termination of the producer's contract from the company.
Upon the expiration of this one-time policy renewal, the policyholder
will either be assigned to an in-house account or another producer
contracted with the insurance company, provided the policyholder continues
to meet the insurance company's underwriting guidelines.
The Department
of Insurance is aware that some insurance companies continue to send
out renewal policies to policyholders that show the terminated insurance
producer as the producing agent. This is erroneous information. Insurance
producers have brought to the Department's attention that this practice
could lead to E&O claims as the former producer lacks the ability
to properly service the policy. In addition, the producer does not
receive any commission for any policyholder service needs. Insurance
companies are advised to institute procedures to ensure the insurance
company lists the proper insurance producer on contract renewals.
This, in turn, will allow policyholders to contact the proper producer
for future policyholder service needs on policies where the producer
has been terminated.
