01 Nov Designations – Do They Increase Your Liability?
It is interesting how often this question comes up in my discussions with insurance agents. I am not sure exactly why, although I certainly hope this is not a reason (or an excuse) why some agency personnel would choose not to pursue one of the many great designation programs we have in our industry.
In my 35+ years in the Agents’ E&O world, I have read many E&O claims and deposition transcripts. A fair number of these raised the issue of staff education.
I remember one case where the plaintiff claimed the agency producer advised him that his general liability policy would be excess over his auto policy (this was unbelievable, but it does show the reach that some plaintiffs will go to find fault).
The agency producer had the CPCU designation. When the judge heard the allegations, he said something to the effect of: “This agency producer has the CPCU designation – one of the highest levels of insurance education and knowledge in the insurance industry – I seriously doubt that he advised you something as ludicrous as the general liability policy being excess over your auto insurance.” In this case, it certainly appears that the CPCU designation helped the agent prevail in this lawsuit.
I have seen other E&O claims where the main issue involved something that one of the various designation programs (CPCU, CIC, etc.) would address. In this case, the plaintiff’s attorney alleged that the insurance agent with a designation should have been more knowledgeable on the issue. This can certainly depend on the issue as there are many insurance issues that agency personnel should be knowledgeable on whether they have the designation or not.
Interestingly, in many E&O claims, the various legal documents (often the Summons and Complaint that are served on agents to notify them of the lawsuit) will have references to the various designations achieved by the specific agency person (producer, account exec, etc.).
So what’s the bottom line on this issue?
In the vast majority of courts on issues to determine negligence, there is no clear-cut position/decision that professional designations increase the legal standard of care.
There is certainly a lot to learn to be successful in the insurance industry, and it is generally felt that the knowledge secured in achieving the various professional designations will help you to achieve this success. Several E&O carriers factor this issue in the development of the E&O premium. This practice seems to show that they favor agents achieving designations. Also, I think that customers would favor an agency whose staff had designations over an agency where this was not the case.
Designations should significantly help agency staff to do their job and to serve their customers better. That by itself is a pretty good reason!