Soliciting insurance agents are generally independent contractors when they:
contract with insurance companies, branch managers, or general agents to solicit applications
for insurance and to collect first-year premiums on the policies they sell;
canvass on a door-to-door basis within their assigned territories, using their own
means and methods; and
receive commissions on the initial premiums they collect, and renewal commissions
on the policies they sell that remain in force. The agent is paid renewal commissions
for periods ranging from about six to 10 years and they are payable even when the
agent no longer sells insurance for the company.
Soliciting agents must comply only with their company’s general rules and regulations.
These rules and regulations involve handling the companies’ business; that is, the
privileges and limitations of the companies' insurance contracts and what to do to
secure applications for such contracts. They do not relate to the agents' work hours
and the agents are free to exercise their own judgment about the people to whom they
try to sell insurance and the time and manner of selling. The agents must comply with
the companies’ underwriting rules regarding the acceptance of risks, types of contracts,
premium rates, physical examinations of applicants, etc. Soliciting agents cannot
violate the laws on rebate and misrepresentation of policies and dividends, etc. The
rules and regulations outline to the agents the broad general principles to follow
soliciting business, accepting first premiums, and delivering policies. The rules
and regulations define the agents' authority limits but do not control their time
or methods to do business.
Most agents must spend all of their work time selling for their companies. They cannot
work for competing companies, except to place with them business which their own companies
will not accept. This restraint does not fix the agents’ work hours. Although the
work contracts are terminable on short notice, usually 30 days, this condition works
to the mutual advantage of all parties concerned.
Soliciting agents usually operate independently, except for the few general restrictions
just mentioned. They choose their own work hours and pay their own business expenses,
such as transportation, license fees, advertising, and entertainment costs. Occasionally,
they have offices in their homes, but usually they are given office space in the companies'
or general agents' offices. They solicit when and from whom they choose and develop
their own soliciting methods. They build their own clienteles and have personal relationships
with their clients, independent of the companies. The clients consult them and rely
upon their advice on insurance matters. They establish reputations for themselves,
but not for their companies. They do not employ assistants or substitutes since it
is impractical. Their livelihoods depend on the amount of energy, time, and ingenuity
they apply to their work.
The prior listed conditions apply, generally, to full-time, part-time, and surplus-line
agents, as well as retired agents who sell occasionally. In nearly all cases, the
company's only interest is to sell insurance in a lawful way. How the agent sells the insurance is of no interest to the company. The company gives
the agents no particular work to do, but merely gives them opportunities to work.