Q: We have a client who has been a nightmare to work with. The client has been very belligerent to our staff on more than one occasion throughout the years. We would rather they go somewhere else but they keep staying at our agency. If we give the proper 60-day notice, can we non-renew this client?

Response 1: First, an agent or agency cannot non-renew a customer. The insurance policy is a contract between the company and the policyholder, so only those two parties can perform a contract action. Remember that a non-renewal must be declared by the client on the new application for future insurance in most states, a negative mark that may inhibit their ability to secure new insurance at a reasonable premium. 

The approach I recommend is to have a frank conversation with the client. Tell them their needs do not match your agency's ability to provide what they want. Suggest other agencies would be a better match, such as another nearby agent. Hopefully, they take the hint. 

Response 2: Consult with a good attorney and your errors & omissions carrier. It depends on the type of policy and the rules in your state. I doubt you have the authority to cancel midterm—that right is probably reserved for the insurer. In our state, we could advise a commercial client to go elsewhere for renewal, as long as the reason was not federally protected. But auto and homeowners policies can only be canceled or non-renewed by the insurer and only for specific reasons spelled out by law.

Response 3: Work with your carrier if underwriting issues will allow the proposed action. However, I suggest that you write a professional letter asking them to take their business elsewhere. Explain to them that your agency is no longer able to meet their business needs. Your staff has tried to meet those needs and feel that the client's best path is seeking advice from another agency.

I have done this several times and it's resulted in great relief to all. I even had a client apologize for their actions once. Your professionalism is the most important aspect of this action.

Response 4: The Big “I" Virtual University has a couple of articles on this. Here are two useful articles: “Purposely Getting Rid of a Customer" and “How to Fire a Customer."

Remember that you do not have the authority to cancel the policy. It's a contract between the insurance carrier and the insured. You can ask the insured to go elsewhere for servicing. But they may not leave. However, when you lay out all your grievances in writing by certified mail, they may gladly take you up on your offer to go elsewhere.

Oh, and when you lay out your grievances, discuss what in particular will be different going forward. Basically, call them out—professionally yet forcefully. One of two things will occur: they will become the model client or they will go harass some other agent.

Response 5: If the customer is a nightmare for normal transactions, imagine how they'll treat you when they have a serious claim. Get rid of them. You can resign as their agent. Tell them you will not be working with them on the renewal. Offer to give them copies of their applications, audit reports, claims histories and more. Start the process as soon as possible so they have plenty of time to find another agent.

Response 6: An agent has no authority to cancel or non-renew a policy. It is unlikely that being a belligerent client is a reason for cancellation. Most states will allow a carrier to non-renew a policy for any reason. However, cancellation is a right of a carrier, not an agency. You need to contact your underwriter and discuss the possibility of non-renewal. You could also have a discussion with your client and encourage them to find another agent at renewal.

This question was originally submitted by an agent through the Big “I" Virtual University's (VU) Ask an Expert service, with responses curated from multiple VU faculty members. Answers to other coverage questions are available on the VU website. If you need help accessing the website, request login information.