Legality of Eliminating Office, Staff, Phones, and Files

[oinsure.me]

I am posting here because I don't want to ask my carriers. Could raise some red flags.

Small office, one employee. We're down to about one call a day, and are paying rent pretty much just to get the mail. I don't plan on growing the business any further. Currently rent and payroll are about 30% of income, and we are open about six hours a day. I don't want to move the office to my home. So:

What is the legality of the following?
1) Close the office. Change the mailing address to a PO box (no physical location)
2) Eliminate the phone system, and replace it with an online forwarding/answering system. Calls can be forwarded to my cell.
3) Scan all files. This is the big one. We have about 300 policies in force, all paper. I want to eliminate them and convert everything to either Google Docs or Dropbox. Put those boxes in cold storage and scan all future paperwork.

No physical office, no files, no phones.

We never implemented an AMS, but are able to do 99% of policy management using the carriers' web portals.

I know one of our carriers would have a problem with it, but I can't imagine the other three will even notice, if they do care.

Possible?

 

[kstein]

I don't see an issue, what line are you in?

 

[oinsure.me]

P&C, mainly. Some Life, some Bonds, but willing to drop both.

 

[Josh]

Some P&C carriers require a physical location.

 

[FL P&C Broker]

Some states require P&C agencies to have offices that are accessible to the public.

 

[djs]

You should have long ago gotten rid of the paper files. Scan them and shred the originals. Have you EVER been asked to send in an original document? Maybe fax a copy, which you can do with the scans.

For office, I would suggest a 'virtual office' arrangement. This gives you a real address, most have a conference room or an office you can use for a few hours if you need it and it will solve the issue of having an 'office'.

A lot of virtual offices also include answering services, so you can have a real person answer your phone. I would suggest getting a number (google voice or ring central type of thing) so that you can pick and choice what happens with the calls pretty easily.

Perhaps you should just sell your book rather than managing it into oblivion.

Dan

 

[TwiLight]

You should have long ago gotten rid of the paper files. Scan them and shred the originals.

This is incorrect and do not take this advice.

Almost every State requires an agent to keep original paper files on L,A&H,P&C for a period of time..... Most are from 3-7 Years.

Look to your contract and procedure guides with each carrier and follow up with your STATE's requirements.

Agent's are licensed as Fiduciaries, and this is especially important to remember. The State can at any time audit a P&C office and make a demand to present files and Banking to ensure separation of funds for premium payments.

I have seen many agent's loose their licenses and be heavily fined by their State just for not keeping their records straight.

Skipper.

 

[djs]

Have you SEEN any get in trouble for having well organized scanned files? I've known many audits and this has NEVER been an issue.

Maybe it varies by carrier or by state, but I've never known any agent to have issues with having scanned files.

Disorganized? Absolutely, but that is true whether electronic or paper.

In fact, an agency next door to me was audited by the state (random, not for any particular reason) and they were complimented on having everything scanned and organized and not keeping paper copies.

In fact, lets have some references:
Electronic Signatures and Online Contracts | Nolo.com

Electronic contracts and electronic signatures are just as legal and enforceable as traditional paper contracts signed in ink. Federal legislation enacted in 2000, known as the Electronic Signatures in Global and International Commerce act (ESGICA), removed the uncertainty that previously plagued e-contracts.
This 2000 e-signature law made electronic contracts and signatures as legally valid as paper contracts, which was great news for companies that conduct business online, particularly companies that provide financial, insurance, and household services to consumers.

Granted, this is in reference to fully electronic signatures, but if you do enough reading you will find scanned signatures (barring contradictory evidence) are upheld.

When can you not use scanned signatures (quoting the same source)

Contracts That Must Be on Paper
To protect consumers from potential abuses, electronic versions of the following documents are invalid and unenforceable:
wills, codicils, and testamentary trusts
documents relating to adoption, divorce, and other family law matters
court orders, notices, and other court documents such as pleadings or motions
notices of cancellation or termination of utility services
notices of default, repossession, foreclosure, or eviction
notices of cancellation or termination of health or life insurance benefits
product recall notices affecting health or safety, and
documents required by law to accompany the transportation of hazardous materials.

Now, you might say, see, notices of cancellation of policies.... but I don't know of many agents that send these out. They are sent by the carrier. And, even at that, you can simply keep an electronic version of the notice sent, but the notice you send has to be on paper.

All that said, I do realize that some agent appointment contracts still say you have to retain copies of all signatures on paper. Hopefully, those are a dying breed.

Dan

 

[TwiLight]

I have no issues with your references or organized scan files. I was simply addressing OPs reference to his paper apps. These have wet signatures.

My point is still valid and is in no way a fair comparison to yours and why you are changing the discussion to fit a premise to defend your irresposible comment to the OP.

 

[stuy119]

If you go for electronic files, pay for the "upgraded" version of Box.net, Dropbox, or Google Docs to ensure HIPAA compliance (even though you don't do L&H, pay for the extra layer of security and encryption).