Can an Agent Require a Customer to Buy More Than One Policy?

A recent caller to the Free Legal Service Program that I offer for members of the Independent Insurance Agents of Georgia asked the above question in the context of a potential commercial lines customer who wanted a policy on which the agent would not have made much, if any, commission.  The agent wanted to know if they could require the customer to buy another policy on which the agent would make some commission as a condition to selling the customer the policy requested.

My review of the Georgia Insurance Code did not reveal any statute that specifically addressed the subject of the agent’s question, but the regulations issued by the Insurance Commissioner’s Office did contain prohibitions on requiring a potential purchaser of one insurance policy to buy another policy in two situations.  Those situations involve a customer who is a natural person and wants to buy either a “private passenger automobile policy” or a policy covering “residential property at a specifically described location.”  In both instances, the regulations state that an agent who refuses to sell such a policy because the potential insured is not willing or able to buy another type of policy or one with limits above those required by law engages in the grouping of risks.  If requiring the insured to buy another type of policy is (i) “not actuarially supported”, (ii) “not relevant to risk”, (iii) “not based on a reasonable consideration allowed” for the creation of rates by insurance companies, or (iv) “is based in whole or in part, directly or indirectly, upon race, creed or ethnic extraction”, such a requirement is unlawful as a fictitious grouping of risks that constitutes unfair discrimination.  It is unlikely that a requirement that a potential personal lines customer be required to buy a policy they had not requested to obtain a policy they want will meet any of the above requirements.

Whether the Insurance Commissioner would apply the same rationale to the sale of commercial lines policies is unknown.  If not or if any of the above requirements could be satisfied with respect to the commercial lines policies in question, the general rule is that an agent is free to do business or not do business with whomever they want on whatever terms they want, subject of course to the federal and state anti-discrimination laws.  If an agent decides to institute a requirement that a commercial lines customer who wants a certain type of policy must also buy another type of policy, I suggest that this requirement be applied consistently to every such customer.  Otherwise, the agent would run the risk of violating the anti-discrimination laws.     

If any of my readers have implemented such a requirement, please let me know, as I would like to find out how it has worked out.