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other voicesCaptive Agents, the Forgotten PeopleWhat if you decided to start yourown business? You find a productyou feel you can really market. Youinvest thousands of dollars and years ofhard work into establishing a successfulbusiness, which includes hundredsof faithful returning customers. Thingsbegin to look like maybe you are finallymaking it as a successful business owner.You are established and respected in thecommunity. You own the building yourbusiness is in. Things are really lookingup. But suddenly, with one fell swoop, it isall taken away from you. Someone biggerand more powerful than yourself decidedyour business was theirs. You are out withessentially nothing, including your reputation.Sound familiar?This is the plight of the captive insuranceagent today. Captive agents arecontrolled like employees but claimed bycaptive insurance companies as independentcontractors. Captive agents are oftentold how to sell, what hours they must beopen, and when they cannot take a vacation.They are required to attend meetingsof questionable importance. They’regiven sales quotas that are often beyondthe realm of possibility because the captiveinsurance company controls the rates.They are asked to submit endless progressreports and are reprimanded and threatenedif these reports are not submittedin a timely manner. Agents are told whothey can and cannot hire. Often captiveinsurance companies provide phone systemsand computer systems to the agentin an effort to control and monitor theagent. Captive agents often find that eventhough they pay the monthly phone bill,the company has forced them to sign anagreement that their phone number belongsto the company. Advertising is oftenforcefully shared in order to control theagent. Agents are blamed and often findtheir contracts terminated for too manylosses, too few 100/300 liability coverages,too low a retention rate, too low an applicationcount, or any other of a list ofabout 20 “indicators” upon which agentsare judged. The list of controls goes onand on.Captive insurance companies seemto take the word captive literally. Thedictionary defines captive as a “prisoner,unable to escape, forced to use or acceptsomething.” If a captive agent tries toleave a captive company to sell as a trueindependent agent, he is often sued andrestricted by claims that the names, addresses,phone numbers, coverages andrenewal dates of his clients are “trade secrets”that belong to the insurance company.In the independent world, agentsare truly independent. Independents ownthe names, addresses, and client data thatthey brought into their agency. What exactlyis the difference here? Nearly alldata collected by both types of agents isreadily available for public viewing. Whythis same information is considered atrade secret by captive insurance companiesand not by independent companiesis very unclear and unfair.Captive agents’ contracts are oftenterminated because the company wantstheir policies to give to new agents-intraining.Or perhaps a district manageris being asked to step down, so the companysimply figures out how to fire theagent and then takes his agency awayin order to give it to the district manager.Terminating an agent’s contract isquite easy because the district managercan place any production requirement hewants on the agent regardless of whetherthe company’s rates allow an agent to sellor not. Often excuses for terminating are“manufactured.” Agents have been falsely38 — Exclusivefocus Spring 2009