In response to Big I New York’s advocacy work, Kemper Personal Insurance will retroactively reinstate old commission levels for business its agents have produced since last fall. Big I New York learned this news this afternoon during a meeting with representatives of the New York State Department of Financial Services (DFS.) The carrier should formally notify its agents by the end of this month.
The carrier, which announced last summer its intention to exit preferred auto and home markets countrywide, has taken several steps to reduce its volume in New York. These measures did not appear to comply with New York Insurance Law Section 3425. That law requires auto insurance carriers to file with DFS and receive approval for withdrawal plans when they wish to leave the market. The law also states that, when DFS has determined that a carrier was using certain actions to exit the market without filing a plan, the carrier must pay its agents commissions at the rate that applied before it took the action.
In response to alerts Big I New York received from its members throughout last fall, we immediately engaged with the DFS in December and asked that the department investigate Kemper’s market actions and instruct them to comply with the requirements of Section 3425. As we have received additional information, we have continued our dialogue with the DFS.
By letter dated February 20, DFS told Kemper that it had determined that they were attempting to exit the New York markets without filing the required plan. They ordered the carrier to cease taking actions to reduce its volume until they have submitted a plan and the department has approved it. The letter also said, “Kemper also should confirm that it will comply with New York Insurance § 3425(j) and (n), with regard to insurance agent commissions and payment plans.”
During our call today, DFS confirmed that Kemper will reinstate the commission levels that were in effect prior to last October 1. We were told the reinstatement will apply to renewals going forward and retroactively to policies issued since the commission reduction went into effect. DFS said that they expect Kemper will notify its agents sometime before the end of this month.
The carrier also told DFS that they are offering a workaround for agents regarding the elimination of electronic signature capability. Kemper agents should contact the carrier for details on the workaround.
We are very pleased that the DFS addressed our members’ concerns about this carrier and have extended our thanks. For those members who are Kemper agents, we encourage you to watch out for future communications from the company.
As always, Big I New York has your back.