The Federal Non-Compete Ban That Never Happened
An agency principal drafting a new producer agreement in 2026 cannot lean on a federal ban to simplify the question. The FTC’s April 2024 rule that would have banned most non-compete agreements nationally was vacated by a federal district court in Texas in August 2024, and the FTC formally abandoned its appeal in September 2025. Enforceability is therefore governed entirely by whichever state’s law applies to the agreement being signed, not a single national standard.
Why a Narrow Non-Solicit Beats a Broad Non-Compete
State courts, per MarshBerry’s own February 2026 analysis of the current legal landscape, are far more willing to enforce a narrowly drafted client non-solicitation clause, one that restricts contacting the specific clients on a departing producer’s book, than a broad non-compete that tries to bar someone from working in insurance at all within a territory. The practical drafting lesson is not to write the broadest agreement possible; it is to write the narrowest one that still protects what matters, the client relationships themselves.
MarshBerry’s Five-Part Structure for an Agreement That Holds Up
MarshBerry’s own recommended framework, built for agencies navigating exactly this legal environment, runs five parts. First, re-engineer restrictive covenants narrowly rather than broadly, tightening scope to what a court will enforce. Second, protect confidential information directly: written acknowledgments of what counts as confidential, tiered system access by role, and device management policies that survive a departure. Third, strengthen duty-of-loyalty safeguards, including training sales managers to recognize the behavioral red flags that typically precede a producer’s departure.
Fourth, use competitive retention tools proactively, deferred compensation and equity tied to retention metrics, so staying is also the financially rational choice. Fifth, prepare a litigation response protocol in advance, not improvised the week a producer walks out with a client list.
Where State Law Changes the Answer
Two named examples illustrate how much state law varies, drawn from legal-industry summaries of state non-compete treatment rather than this guide’s own case-law review. South Dakota law generally prohibits agreements restraining lawful trade, but carves out a specific exception permitting an insurance carrier’s contract with a captive agent to prohibit soliciting that carrier’s customers within a defined geographic area for up to two years after termination. Pennsylvania is a blue-pencil state, meaning its courts can narrow an unreasonable restrictive covenant to make it enforceable rather than voiding it outright, enforcing a non-compete only to the extent reasonably necessary to protect the employer’s business interests.
Both examples should be confirmed against the specific state and the actual agreement language, ideally with qualified counsel, before either is relied on as fact; an agreement drafted for one state and copied into a new hire’s contract in another is not a safe assumption.
Drafting Before a Departure Instead of Reacting After One
This guide is deliberately about the agreement an agency principal signs with a producer before any departure, not the reactive question of what a departing producer’s existing agreement does or does not restrict once they are already gone. Getting the drafting right on the way in is the cheaper version of this problem; discovering the agreement’s gaps only after a departure is the expensive one.
Human + AI SDRs keep new-business meetings landing on an agency’s calendar regardless of how any single producer agreement plays out, so growth does not depend on one contract holding up perfectly.
What this means for you
- There is no federal non-compete ban as of 2026; the FTC’s April 2024 rule was vacated in August 2024 and its appeal formally abandoned in September 2025, per MarshBerry.
- Courts are far more willing to enforce a narrowly drafted client non-solicitation clause than a broad non-compete, particularly in producer-driven businesses.
- MarshBerry recommends five protective steps: narrow restrictive covenants, documented confidential-information safeguards, duty-of-loyalty training, competitive retention tools, and a prepared litigation response protocol.
- State law varies sharply: South Dakota carves out a two-year geographic non-solicit exception for captive agents, and Pennsylvania is a blue-pencil state that narrows rather than voids an unreasonable clause; confirm specifics with counsel before relying on either.
Sources
The external data in this guide draws on the sources below. Figures described in the text as estimates or industry triangulations are directional and are not attributed to a single dataset.
- MarshBerry, Non-Competes Still Exist, But So Do Talent Raids
- Cohen Seglias, Courts Scrutinize Non-Compete Agreements for Insurance Agents
- The Regent Group, Navigating Non-Competes in the Insurance Industry