04 Oct Are Your Companies Sending the Policy Direct?
Are your companies sending the policy direct? There is no doubt this is occurring more often today than in the past in both Personal and Commercial Lines. For agents, this has probably resulted in some expense and time savings since you no longer have to send the policies. This sounds like a positive step in the evolution of our business. But does this mean agencies don’t have to do anything else? It seems that with several agencies, policy checking doesn’t have the same level of importance when policies are sent direct. And by leaving out this key step, there are some potential E&O ramifications.
Typically, when policies are mailed from the agency to the customer, the agency includes a cover letter thanking the customer for their business and also (hopefully) encouraging the customer to read their policy and to contact the agency should there be any areas in need of correction. Including this cover letter has shown on many occasions to aid in defense of the agency should a problem subsequently develop.
I am not sure if the carriers include a cover letter of some type when they mail the policy directly to the customer. However, on my recent BOP renewal, Liberty did include a cover letter. But if the carriers are not currently doing this, it certainly sounds like the policy is sent out by its lonesome self and nothing further.
In discussing this matter with agents, it does seem that when the policy is sent by the carrier directly to the customer, the typical cover letter (that the agency would have included had they mailed the policy) is absent. But does it have to be?
Why couldn’t the cover letter be modified to read something like this:
Dear “Client,”
We would again like to thank you for honoring our agency with your insurance.
Shortly, you will be receiving your (type of coverage) policy directly from (the insurance carrier). It is important that you take the time to read this policy to ensure your understanding of the limits and the coverages. If there are any questions or you wish to make any changes to this policy, please contact our agency promptly.
Please also understand that you have selected the limits of insurance, and we can’t guarantee that the limit selected will be sufficient in the event of a major loss. Higher limits are available upon your request.
Thank you for your confidence in our agency; we appreciate your business.
The language above: “you have selected the limits of insurance,” is actually in the letter I got from my agent. On the surface, it may sound harsh, but in actuality, isn’t it the truth?
The presence of a generic cover letter is certainly a positive in defense of the agency. Just because the carrier is sending the policy directly, this does not preclude your agency from sending a cover letter. Also, just because the carrier is sending the policy does not preclude your agency from doing a thorough policy check.