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When decedent died, and until the time of trial, WSA had a
contract with the Maryland Casualty Co. (MCC) to be an MGA. The
contract provides that MCC is the sole supplier of insurance to
the MGA and that WSA has the exclusive right to sell personal and
commercial lines of insurance for MCC in 17 counties in western
North Carolina. In 1995, 68 to 72 percent of WSA’s business came
from personal lines. WSA was MCC’s only MGA in 1995. MCC or WSA
could terminate the contract at any time by giving 180 days’
written notice to the other party.
WSA sells insurance for MCC through about 42 independent
retail insurance agents. Independent agents may obtain insurance
for their customers from any insurance company. WSA processes
insurance applications from customers of the retail agents and
makes underwriting decisions. If WSA accepts an application, it
sets the premium, issues the policy to the retail agent, and pays
the premium to MCC. MCC then pays part of the premium to WSA.
WSA uses these funds to pay its expenses and the retail agents
and keeps the excess as profit. The retail agents have contracts
with WSA which establish the amounts of commissions they will
receive for selling MCC products. WSA would not be a viable
business without its relationship with MCC or if it could not
sell personal lines of insurance.
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Last modified: May 25, 2011