20 Jun Communicate, Communicate, Communicate
For those who have attended an E&O seminar in their insurance career, the words “Document, Document, Document” have definitely been spoken, and with good reason. Few key “Best Practices” have ever been spoken that rival those three words in the importance of E&O loss prevention.
I will throw a new twist at you. Although it doesn’t replace the importance of documentation as #1, it is up there. Those words are “Communicate, Communicate, Communicate.”
Take the following personal lines example: Your client has homeowners with your fine agency. The policy has Ordinance or Law coverage at 100%. Because of market conditions, that carrier is taking a significant rate increase, and the client asks you to market the coverage. You find coverage at a lower premium and advise the client. They advise you to move the coverage. The client suffers a significant loss where the Ordinance or Law coverage would apply, but the coverage with the new carrier was limited to 25%, so the client has now suffered a loss that is not fully covered. During the testimony in the E&O litigation (yes, you will probably be sued), it was discovered that the Ordinance or Law coverage with the new carrier was at a lower level, and the client alleges they were never told (which they weren’t) about the reduction. They say, “I would never have advised my agent to move the coverage if I knew it was being reduced.” Fast forward – you lose. Now imagine if you had something in writing where you advised the client that the Ordinance or Law coverage with the proposed new carrier was not at the same level, and the client still advised you to move the coverage — totally different outcome.
I could think of hundreds of similar scenarios where communication would play a key role. In the last month alone, I have had discussions with no less than five of the agencies I am honored to deal with where at the end of the day, I advised, “Just make sure you tell the client.” One involved a carrier moving coverage to their surplus lines carrier and reducing the UM/UIM coverage on the personal auto policy to a level that is less than the BI limits. My comment: “Make sure you advise the client and provide them with some options.” Another involved a unique wind coverage where loss adjustment would be based on the “actual” wind speed at a specific location. In this case, instead of having producers verbally trying to explain the coverage, I suggested sending the client carrier marketing material that provided specifics on coverage would apply. In the Commercial Lines arena, what if you had a Cyber proposal that would have covered a loss, but you never advised the client of that proposal because you didn’t think they would spend the extra money? They suffer a loss that would have been covered by the “more expensive” policy but not by the “cheaper” policy. It is best to communicate the various proposals to the client and let them decide. Client Accountability should be a key “Best Practice” in your agency.
Written communication is better than verbal communication, and both are better than no communication. Communicate, Communicate, Communicate.
Enjoy!