Hello everyone...This week I will be resigning from the agency I have worked for after 14 years of service as a sales person and have started a new agency. Focusing primarily on group health,dental,life and disability, I currently service over 70 commercial business accounts and do plan on taking them with me. I don't remember signing a non-compete and I am 99% sure I don't have one. The company has always said we own our block of business. I guess I'll find out shortly. My post is simply to ask what problems or pitfalls did anyone encounter during a transition like this. Leaving an agency and taking all possible business to the new company through BOR's. Any start up problems? etc.
Thanks
I don't think the old agency is going to just sit back and let you do this- without a fight of some kind. Could be lawyers involved, maybe. After 14 years -I could imagine you have written quite a bit of business and have nice renewals- renewals that are of course in jeopardy of going bye-bye. Unless you have some kind of nice vesting deal. Sounds risky, but risk takers -often get rewarded nicely.
It really doesn't matter if there was a non-compete or not. Expect your former agency to send a strongly worded letter from their attorney. You can fight it, but expect the battle to be drawn out and expensive.
I fought one (against an MGU with deep pockets) over a dozen years ago and it cost me $20k. They sued me even though I did not take accounts, but they claimed the loss of business (almost 80% of the accounts I had written) was directly due to my action.
If you did not sign a non compete then I think you are good to go. The fact that they said you "own your block"
I almost had to do what your going through.
Make sure you have your corporation set up with Tax ID numbers and proper insurance.
Talk to all of your carriers and find out how to switch the accounts. If you are the writing agent and just the commissions are going to the agency then it might be a very easy switch. Make sure you have all of your banking accounts set up since mosts carriers are doing EFT's.
If your current agency is the writing agent then your going to have to get your AOR's from each client. If this is the case it could take over a month to starting recieving your commission.
One thing to be aware of, if your forming new contracts with the carriers they might pay you lower commission due to production standards.
Thank you for your responses. I feel bad since I have a good relationship with the owner, but it's time to make a name for myself. Kinda what I thought however, should be ok or I get sued. Any other thoughts, let me know.
Excuse the pun so close to Halloween, but kinda like walking into a haunted house...scared, but excited.
By law, they can't stop you from earning a living even if you signed a non compete, in most states.
I don't think it will cost you a lot in legal fees without costing them the same, so if you didn't sign anything, it may not even be worth it for them to pursue it.
Pray on it, and release it, see what happens. Don't make it your focus.
------------------------------------ "Weakness of attitude becomes weakness of character." ~~Einstein
If you have never fought a former employer you have no idea what it will cost or where it will go. You do have a right to earn a living but not on their dime. They can claim infringement on goodwill, trade secrets, abuse of an employer-employee relationship . . . any number of ways to cry foul.
If you feel so strongly about it, why not ask your employer during the exit interview. Better to have an idea up front than worry about the other shoe dropping.
Another idea is, ask former employees who have left.
Turn it around. If someone worked for me for 14 years, and then thought they could leave and take accounts with them they would be sorely disappointed.
When you say commercial accounts I assume you are talking about P&C business. The P&C agencies I have dealt with in the past have all had pretty much the same arrangement.
You can take what you brought into the relationship but you must leave behind anything developed or house accounts you were allowed to service. New accounts during your tenure can be purchased based on a pre-determined formula.
Commercial accounts can pay a lot of bills. . . both for you and your former employer. Don't expect them to roll over.
The majority of my business is group health, life, dental and disability and I will be the first to leave and take business. Other agents have left or been fired, but never took their clients as they never really wrote much.
Somarco
"You can take what you brought into the relationship but you must leave behind anything developed or house accounts you were allowed to service. New accounts during your tenure can be purchased based on a pre-determined formula."
That's the "thing", nothing was pre-determined, I never signed a non-compete and they always said I own my block. I expect them to be pissed and upset, but why would I pay for my business.
That's the trouble with captive positions. They make money off your back for as long as you can stand it.
If they are decent people they should expect an agent to leave one day to go indie and appreciate all the money you've made them untill now. That's a risk they take in exchange for the override for as long as it lasts. If they aren't mature enough to understand then you will have trouble.
Plan your conversation so that you and they come out winners.
------------------------------------ "People who think they know it all really annoy those of us who do"
Uh, because you wrote it while in the employ of someone who provided you with an office, support staff, possibly a salary and benefits. In other words, they gave you the ability to do something you probably could not have done on your own.
Obviously you will find out what will happen when they leave. I have just related my personal experience as well as what I have observed from agents I know.
They may give you a pat on the back and wish you well.
Or they could kick you out the door and dare you to even try to take any of those accounts.
I can't imagine that you actually do not have any kind of employment agreement at all. In some states, a non-disclosure agreement is a requirement due to confidential information being made available by your access to private information of individual consumers. My guess is that was signed at some point. I've never worked for anyone without an agreement. If your GA has had a successful agency for so long, I'm sure he or she is under advisement of an attorney who would have buttoned down such issues in their favor long ago. I'm not saying you shouldn't make the jump. Your employer has a lot of leverage though. You need to be willing to make it a loss they can weather. Why not propose splitting your accounts based upon your current commission split? Both parties walk away with the same income.
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Uh, because you wrote it while in the employ of someone who provided you with an office, support staff, possibly a salary and benefits. In other words, they gave you the ability to do something you probably could not have done on your own.
That's why I'm leaving. The revenue I've generated for the company over 14 years has far exceeded my expenses and having to support 2 owners salaries who do not have a book of business doesn't make sense anymore.
In other words, they gave you the ability to do something you probably could not have done on your own.
Somarco, you seem to be forgetting about whatever he already made for them as well, which is common, many people don't realize the wealth they bring to a position, that's why they usually just take what's offered without holding out for more money/incentives, whereby diminshing their value, and selling themselves short.
After 14 years you should have a good idea of what you are bringing in off of your block of business.
Its sounds like you are working for not very business savy owners. To work for any size company and not have an agreement in place is very odd. Then add they do not have clients of their own. They might close the doors after you leave.
After 14 years you should have a good idea of what you are bringing in off of your block of business.
Its sounds like you are working for not very business savy owners. To work for any size company and not have an agreement in place is very odd. Then add they do not have clients of their own. They might close the doors after you leave.
Take you biz and run with it.
Now this is what I'm screaming. Not literally of course.
I know exactly what my block brings in outside of any bonuses that they have been getting and not sharing.
They are actually good business people, but, as their first direct sales rep., they were learning as they went like I was and over the years they relyed on trust. As many of you know, after years of producing, it gets difficult to keep producing high levels of new business without sacrificing the service of existing clients. I am the producing agent for approx. 1/3 of their total business.
Somarco, you seem to be forgetting about whatever he already made for them as well,
Rob, it is quite obvious you have never had a real job. Otherwise you would not have so much trouble with this issue.
Now if the client calls you...
That is not a good defense.
Besides, it doesn't matter if they called you or you called them . . . even to say I have gone and here is my new number. It the former employer wants to file suit they can. They don't have to PROVE anything to get a judge to sign off on the suit. All that is needed is to ALLEGE they have been harmed by your action.
Once you are served, you have a specific time frame in which to respond. Fail to answer and they move for a summary judgment.
If you fight it you have legal fees. They go thru the discovery process where they subpoena your phone records, email records, transcripts of phone calls, etc.
Anyone can file suit for a few hundred bucks and you have no choice but to answer unless you want to give in by default. Even without a signed agreement, they can allege you violated their trust and used their resources to "build" your business.
This business is different from selling cars or vacuum cleaners. There is no residual income in that industry.
Insurance has residuals that are calculated in the business income stream. That is what makes leaving a salaried position more difficult with or without a signed agreement.
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Leaving agency after 14 years
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