2023 Massachusetts General Laws › Part I - Administration of the Government › Title XXII - Corporations › Chapter 175 - Insurance › Section 163 - Agents; Licensing; Cancellation, Modification, Revocation, or Expiration of Contract; Referees; Decision; Review

Section 163. No company shall cancel the authority of any independent insurance agent for fire or casualty insurance, or both, if said agent is not an employee of said company and no company shall modify a contract with such an agent unless the company gives written notice of its intent to cancel such agent or its intent to modify such contract at least one hundred and eighty days before the proposed effective date of any such cancellation or modification. No company shall allow the license of any such agent to expire unless the company gives written notice of its intent to do so at least one hundred and eighty days before the proposed effective date of any such expiration. Except as otherwise provided herein, any agent receiving notice of such cancellation, modification or expiration may, within fifteen days after receipt thereof, make a written demand for reference to three referees of the question as to whether or not such cancellation, modification or expiration will so affect the renewal, continuation or replacement of any policies placed with the company through the efforts of the agent, or the services needed by any policyholder doing business with the company as a result of the efforts of the agent, as to justify renewal or continuation of any policies then in effect having been placed with such company by such agent. The notice of cancellation, modification or expiration shall include a copy of the preceding sentence. In the event the referees shall find that such cancellation, modification or expiration will so affect the renewal, continuation or replacement of any policies placed with the company through the efforts of the agent, or the services needed by any policyholders doing business with the company as a result of the efforts of the agent, then the referees shall order continuance or renewal of any policies expiring within a period of thirteen months of the issuance of such notice, at a rate of compensation to such agent equal to that as provided in the agency agreement expiring or being so cancelled or modified, for one additional policy period equal in length to the most recent policy period of such expiring policy, but in no event for more than one year; provided that with respect to motor vehicle insurance policies expiring within the aforesaid thirteen-month period, such policies shall be renewed for policy periods not to exceed one year. Such one year renewals of all motor vehicle insurance policies shall be provided at each expiration of such policies during the aforementioned thirteen-month period; provided, however, that the referees shall not order a continuance or renewal of such policies if they find that the reason for the cancellation or expiration of the agency agreement by the company was legitimately based upon one of the following grounds:
(a) the agent was convicted of a dishonest act related to his occupation as an insurance agent;
(b) the agent's license to engage as an insurance broker was revoked;
(c) the company surrendered its license to do business in the commonwealth.
An agent making a written demand for such reference shall accompany said written demand with the names and addresses of three persons, whereupon the company shall within fifteen days thereof notify the agent of its choice of one of the said persons to act as one of the referees and at the same time submit the names and addresses of three persons to the agent, who shall within fifteen days after receiving such names, notify the company in writing of his choice of one of such persons to act as a second referee. At the same time the agent shall notify the commissioner, such notice to be on a form prescribed by the commissioner, that both the company and agent have chosen referees. Within ten days of the receipt of such notice the commissioner shall appoint a person to serve as third referee, and shall notify such person, the agent and the company in writing of such appointment. Each person nominated or appointed as a referee shall be a disinterested person, shall be a resident of the commonwealth and shall be willing to act as such referee. Within ten working days of the appointment of the third referee, who shall serve as chairman, the three referees shall meet, hear evidence, reduce their decisions to writing, and sign it, and shall deliver a copy thereof to the agent, to the company and to the commissioner. In the event any company receiving such a written demand for such a reference fails to comply with the provisions of this paragraph, then such agent shall have the authority to renew or continue any policies placed with such company through the efforts of such agent expiring within a period of thirteen months from the date of the notice of cancellation, modification or expiration of the agency agreement, at a rate of compensation to such agent equal to that as provided in the agency agreement expiring or being so cancelled or modified, for one additional policy period equal in length to the most recent policy period of such expiring policy, but in no event for more than one year; provided that, with respect to motor vehicle insurance policies expiring within the aforesaid thirteen-month period, such policies shall be renewed for policy periods not to exceed one year. Such one year renewals of all motor vehicle insurance policies shall be provided at each expiration of such policies during the aforesaid thirteen-month period.
Any insurance company and any insurance agent may by written contract agree to modify the provisions of the preceding two paragraphs, other than the requirement of a one-hundred-eighty-day notice in the event of a cancellation or modification of a contract or of intent to allow the expiration of a license, by provisions presented to and approved by the commissioner which he finds after due hearing and investigation will adequately protect both the right of a policyholder to a continuance of insurance and the services of any agent of his own choosing and the right of an agent to fair compensation for the insurance placed with a company as a result of his efforts. The commissioner may make reasonable rules of general application regarding such modified provisions.
The decision of the referees may provide for the renewal or continuance of any or all policies expiring within a period of thirteen months of the issuance of any such notice, at a rate of compensation to such agent equal to that as provided in the agency agreement expiring or being so cancelled or modified, for one additional policy period equal in length to the most recent policy period of such expiring policy, but in no event for more than one year; provided that, with respect to motor vehicle insurance policies expiring within the aforesaid thirteen-month period, such policies shall be renewed for policy periods not to exceed one year. Such one year renewals of all motor vehicle insurance policies shall be provided at each expiration of such policies during the aforementioned thirteen-month period. The decision of the referees may also provide for the continuance of such previous contractual provisions, if the referees, or a majority of them, find that such decision will best protect the right of a policyholder to a continuance of insurance and the services of an agent of his own choosing and the right of any agent to compensation for the insurance placed with a company as a result of his efforts giving due consideration to the possibility the affected agent has of obtaining similar coverage for policyholders affected from other companies at reasonable compensation. The decisions rendered in accordance with the provisions of this section providing for reference shall be binding on all companies and agents affected thereby. If such a decision orders the renewal or continuance of any policies, policyholders and the affected agent shall be entitled in all respects to the same services and practices as were in effect prior to reference insofar as amounts and types of coverage, credit terms and agency services are also continued. The referees, or a majority of them, shall fix a fair compensation for the agent affected whenever they order such a renewal or continuance of policies.
All policies expiring within thirteen months of the notice may be renewed for the policy periods as aforesaid but no agent or company relying on this section shall again refer the same issue to referees. Where other provisions of the general laws require notice to policyholders before nonrenewal of any coverages, the company shall at the request of the agent who is unable to replace any such policy which has been renewed for one or more policy periods in accordance with this section comply with those provisions of law.
An agent initiating reference under this section and the company receiving written demand shall each be liable for the payment of the reasonable charges and expenses of his nominee for referee and one half of the compensation for the reasonable charges and expenses of the third referee. The third referee shall forthwith upon the execution of the decision furnish the agent and the company with a written statement specifying in detail his charges for compensation and expenses. The agent or the company, if aggrieved by said charges, may petition the commissioner for review. The petition shall set forth with particularity the specific item or charges in dispute. The commissioner shall, within ten days of receipt of the petition, notify the interested parties of the date established for a hearing on said petition, and, after said hearing the commissioner shall approve or disapprove said charges in whole or in part. His findings and decisions shall be final and conclusive.
No company shall require of any independent insurance agent or broker for fire or casualty insurance, or both, if said insurance agent or broker is not an employee of said company, payment for any policy of insurance or of accounts current earlier than fifty days of the close of the month in which such fire or casualty policies are delivered to the agent or fifty days of the close of the month in which the policy becomes effective, whichever is later.