Arm chair and Actual lawyers
- Thread starter Kedwyn
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OneofOne
Silver Baronet of the Realm
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I don't even play a lawyer on TV, but IF I'm reading it right it sounds like you're responsible for what you sold, they are responsible for what they sold EXCEPT if you sold policies before selling the business, and the commission of said policies didn't arrive until after the sell date, then the new owner gets said commissions while you retain liability for those commissions should they be canceled. Which sounds fucked up but /shrug Buying/selling businesses can be messy. Guess it depends on your historical average of cancels how much this could screw you (assuming, again, I'm reading it correctly).
General Antony
Vyemm Raider
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I would say that the buyer of the company is responsible for paying that liability in the scenario you describe. I'm assuming the unearned commissions were factored into the purchase price? Otherwise it seems like he's getting zero commissions on those policies yet bearing substantial risk.
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The "arising prior to" and "arising on or after" refer to the policies, since that is the closest term to the modifier. So if a policy arose on or after the effective date, the liability is the buyers, if the policy arose before the Effective Date, the liability is yours. The way its written, you'd be responsible for any paybacks on any policies arising before the effective date, even if you didn't actually get the commission on it, because the commission was received after the effective date. (See the first provision of section v.)
That provision seems to be to your disadvantage, in that sense.
That provision seems to be to your disadvantage, in that sense.
Joeboo
Molten Core Raider
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This should be a fairly simple matter. You should have access to your average policy persistency numbers. The insurance company that my father and I work for provides us our persistency % on a monthly, quarterly, and yearly basis. Our company average runs right about 90%, meaning we lose about 10% of our policies per year. Based on that info, it should be pretty easy to predict how many pre-sale policies are going to cancel over X amount of months post-sale, and the sale price could be adjusted correctly.
It won't be 100% accurate, but it should get you close enough that neither side should care much. When you're talking about a sale in the hundreds of thousands, if not millions of dollars(most insurance brokerages in our neck of the woods sell for roughly 5X yearly income value), if this estimate is off my a couple grand when it's all said and done isn't that big of a deal.
It won't be 100% accurate, but it should get you close enough that neither side should care much. When you're talking about a sale in the hundreds of thousands, if not millions of dollars(most insurance brokerages in our neck of the woods sell for roughly 5X yearly income value), if this estimate is off my a couple grand when it's all said and done isn't that big of a deal.