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Thrivent Financial for Lutherans, the largest fraternal benefit society in the United States, doesn't turn the other cheek when it comes to former agents allegedly violating noncompete agreements.
In the first-half of 2003, Thrivent Financial for Lutherans took legal action against 14 former agents for allegedly violating noncompete agreements, and sent about 140 letters to other former agents reminding them of their contract obligations.
The company, which was formed when Lutheran Brotherhood of Minneapolis and Aid Association for Lutherans merged in 2002, is the largest fraternal benefit society in the United States. Thrivent Financial serves the Lutheran community through charity programs, and sells life insurance, annuities, mutual funds and other products to its nearly 3 million members-about a third of the 9.5 million Lutheran adults in the United States. All of Thrivent Financial's agents are Lutherans, and while some products also can be sold to non-Lutherans, the Lutheran community is the main marketing target and represent the vast majority of the company's members.
Those former agents being targeted with letters and legal actions left the company after the merger. But it is not a sign that the company is in turmoil, said Paul Kelash, a spokesman for the company.
"This goes on with other companies. No one is going to raise their hand and say, 'yeah, we take action against agents,' but it happens throughout the industry," Kelash said. In fact, both predecessor companies have taken similar actions against former agents from time to time, he said.
Noncompete clauses are commonly included in insurance agents' contracts, said Jeffrey L. Braff, an attorney with the Philadelphia-based law firm of Cozen O'Connor.
"Typically there are restrictive covenants either on an employment agreement or some sort of contract, or they would be part of the condition of employment," Braff said. "They're intended to prevent a former employee from soliciting the customers that they used to serve."
Braff said lawsuits against former agents, financial advisers or brokers are very common. "Companies put a lot of investment into training these folks and putting them in a position where they can be successful in the Merrill Lynches and Thrivents of the world. They want to protect that investment. As the result of making that investment, consumers get attracted, and it's...