23 Jun Carrier Conversations – Are They Being Properly Documented?
Most agency staff, especially the veterans, have documenting client discussions down pat. They know how important it is to have those conversations noted in the agency file and with some type of written communication back to the client memorializing the discussions. The issue of documentation has been the essence of E&O classes for the last 50 years. However, one area where there is some potential inconsistency involves discussions the agency has with their carriers and wholesalers. These are equally important and agency training should include this issue.
Let me give you an example of how the documentation between an agency and a carrier made an E&O claim against an agency essentially go away. This was a case where I was involved as an expert witness.
The client was a higher education account, and every semester they would allow some of their students to study abroad. When overseas, one of the students was physically and mentally harmed by a professor. The client had Foreign Liability, but there was serious question as to whether the claim needed to be filed in the foreign country or in the United States. Apparently, the claim was filed in the wrong place and it was subsequently denied by the carrier. This prompted the university to bring an E&O action against the agent. This is where I came in. As is the situation with many E&O claims, the issue of documentation became paramount. An extensive amount of emails on this account were reviewed hoping to find the needle in the haystack – and we did. We located an email from the carrier underwriter that clearly stated that if there was a claim, there would be coverage regardless of where the claim was presented. This was contrary to the policy language, and the carrier argued that the policy was clear on that issue. We were able to get the carrier to pay the claim, – contending that the carrier was ultimately responsible for the acts of their employees, and the E&O case against the agency was dismissed. Without this level of documentation, the case probably would have become a “he said, she said,” and it is difficult to say how it would have ultimately played out.
Clearly, this demonstrated the importance of having a record of the emails between the respective parties. What if it would have been a phone conversation that essentially said the same thing? What should the agency have done? There are two approaches:
- One would be to ask the carrier underwriter to put their verbal comments in an email and send it to you. If you take this approach, be sure to have a good suspense system that ensures you eventually get the requested email.
- The other approach is to send the carrier underwriter an email stating your understanding of the conversation. With this approach, it is best to include language such as, “This is my understanding of what you stated. If I misunderstood you, please let me know as soon as possible.” This puts the responsibility on the carrier underwriter to respond. Their failure to respond would probably be noted as acceptance of your position. This email thread should be saved in the appropriate agency system.
There are numerous situations where a conversation with a carrier underwriter or wholesaler could play a key role. One example that comes to mind is the carrier approving an exception to the underwriting guidelines. While you may believe that the carrier is your friend, they may take a different position at the time of a problem.
This is why agencies should ensure that their position on documentation addresses discussions with their carriers and wholesalers as well.