Renewals, Referral Fees, and Continuing Education: A Producer's First 60 Days at a New Agency
Dana has been a Tennessee producer for nine years, appointed by Carriers X, Y and Z at Agency A. On February 1 she resigns and joins Agency B. Carrier X terminates her appointment; Y and Z transfer theirs. Before she leaves, Dana downloads Agency A's client expiration list to a personal drive. Two weeks later Agency B's owner offers to pay Dana's cousin, who holds no insurance license, $75 for every name she delivers from that list; the cousin will only collect names and phone numbers and pass them along. Dana has also completed 12 of the 24 continuing-education hours she owes before her December 31 renewal.
1. Can Dana keep receiving Carrier X renewal commissions on policies she wrote at Agency A now that her appointment is terminated, and what should she do about the downloaded expiration list?
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Two separate issues decided by two different bodies of law.
Commissions are a contract question, not a licensing question. Dana is still licensed in Tennessee, so nothing in the licensing statute stops Carrier X from paying her; whether it must is set by (a) Carrier X's agency agreement with Agency A and (b) Dana's own commission/employment agreement with Agency A. Most such agreements continue renewals on business the producer was the procuring cause of, and terminate them if the producer solicits the book or is terminated for cause. First step: read both contracts and get Carrier X's producer-of-record rule in writing.
The expiration list is the larger exposure. Client lists are typically confidential information or trade secrets belonging to the agency, and using them to solicit is a breach of that duty - and in most agency agreements an automatic forfeiture trigger for renewals. Downloading the list before resigning strengthens Agency A's position considerably. She should not solicit from it; soliciting clients she personally developed is a closer call but should be cleared with counsel.
2. May Agency B pay $75 per name to Dana's unlicensed cousin for leads drawn from the list?
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Start with what the cousin will actually do. Tennessee, like most states, bars paying a commission or other thing of value to an unlicensed person for soliciting, negotiating, or selling insurance. A genuine referral fee - nominal, flat, not contingent on a sale, with the unlicensed person supplying only a name and contact information and saying nothing about coverage - is commonly treated as outside the licensing bar.
This proposal fails on several counts:
- It is paid per name, not per sale, but it pays for a systematic stream of prospects rather than a one-time courtesy.
- The names come from a competitor's confidential records, which turns the arrangement into evidence of solicitation and misappropriation.
- At $75 per name it is unlikely to be viewed as nominal.
Compliant path: have a licensed producer work the leads, or confine the cousin to a one-off thank-you that is not tied to volume. Confirm the Tennessee Department's current position on nominal referral fees before relying on the exception.
3. It is November 1 and Dana is halfway through her continuing education. What are her obligations and her risks?
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Tennessee producers renew on a biennial cycle and must complete the required continuing-education hours - here 24, including the ethics component - before the license expires. A producer who has not completed them cannot renew and may not transact insurance until the license is reinstated.
Judgment points:
- Twelve hours in two months is achievable but leaves no margin for a course that is not Department-approved or a provider that reports late. Late reporting, not late attendance, is the usual cause of a lapse.
- Enroll now, keep completion certificates personally, and verify the credits post to her transcript before December 31.
- She must not solicit or bind on a lapsed license. Commissions earned while unlicensed can be clawed back by the insurer and create a licensing violation independent of the CE issue.
- Separately confirm Agency B has notified Carriers Y and Z of the new appointment. A license without an appointment does not authorize her to act for that insurer.