Master agency MicroCorp Inc. has announced a new program to protect its agents’ revenue streams in the event that the company goes under.
“I fully understand the need to manage your risk and diversify your income. After all, it is the prudent thing to do,” said MicroCorp president and CEO, Brad Miehl, in an open letter to partners this week. “As of yesterday, this risk existed with every master agency and MicroCorp was no exception. But today this is going to change.”
Officially launching today, although made available to current agents on Nov. 1, MicroCorp’s Commission Assurance Program provides agents with peace of mind by assigning them ownership of their MicroCorp commissions and giving them legal protection against losing them. Any MicroCorp agent can take part in the program by executing a separate legal document, which becomes effective when his or her revenue threshold hits $50,000 in billings per month. If MicroCorp ever filed for bankruptcy, the commissions stream itself would go into escrow. The bankruptcy court would have to review the legal documents and this document would show that the revenue stream actually belongs to the agent.
In an interview with PHONE+, Miehl said the program was in response to agents’ hesitancy to risk putting all of their business with a single master agent. “We have agents that have significant bases with us – around $400,000 or $500,000 a month. And I completely understand where they’re coming from when they say, ‘We’ve got to start spreading this around … What if you went out of business? We can’t lose this chunk of business,’” he said. “We had to come up with a solution for this because we don’t want our agents’ business to plateau or cap with us and have them go somewhere else. And we’re a completely healthy company. There’s no risk of us filing for bankruptcy. We have no debt. We’re very solid and very profitable; but at the same time, we have to recognize this risk with our larger partners.”
MicroCorp assembled a team of attorneys – corporate counsel and also bankruptcy attorneys – in March to work on the Commission Assurance Program document. The team formulated the document around the terms and conditions associated with the MicroCorp’s carrier agreements and supplied the final document in September.
Miehl said the feedback from agents so far is great appreciation for the gesture. And while he sees the potential of other master agents providing a similar program – that is, if they are indeed willing to give up ownership of the commissions – he knows from experience that the groundwork necessary will not allow any company to match MicroCorp’s program immediately.