17 Mar The Power of a Signature
With many E&O claims, it is difficult to point to just one thing that the agent could have done better. Typically, there are a host of issues involved. The goal for the agency is to have as many things as possible in their E&O defense toolbox. One of the more powerful items involves the client signature on the application.
When applications are being completed whether electronically or on paper, there is often a need to secure additional information. Typically, the agent contacts the client and secures the necessary information, notes the information on the application and sends the application to the designated carriers. Everything is good until there is an underlying claim and the information on the application is called into question. If the information on the application is found to be incorrect and considered material, this could be enough to support the denial of the claim. This now places the agency as the potential target for litigation.
In most situations, the insured is going to be held accountable for the contents of an application. However, if the application was completed by the agent, the client could allege they aren’t sure where the information on the application came from. This is where securing the client’s signature or memorialization of conversations takes on a greater role. While one may feel the notes in the file are accurate, there have been numerous situations where the client takes the position that what you have written in the file is not what they told you. Believe it or not, clients may have a different recollection of the conversation when it serves them better.
If an E&O claim is presented, how can an agency avoid these scenarios or enhance its ability to prevail?
- When information is secured over the phone, the agent should look to memorialize the discussion. A common approach is to send the client a letter or email stating the essence of the conversation and advising the client that if this information is not correct, to please contact the agency as soon as possible.
- The agent could have asked the client to provide the information in writing.
- With the use of current electronic signature technology, the agent could have sent the application to the client electronically and asked them to verify the information and sign attesting to the accuracy.
When possible, the client should ideally be asked to complete the application and sign it attesting to the accuracy of the information. Should a problem develop involving a misrepresentation of information on the application, the fact that the client completed and signed it will be very powerful in the agency’s defense. If the agency is meeting with the client in person and taking down various information to complete an application, don’t just ask the client to sign the application, ask them to review it and then sign it if everything looks in order.
Without the client’s signature or a document memorializing the discussion between the parties, it is difficult to say how disputes will be resolved. Agents will win some, and they will lose some. It is best for agents not to take that chance and for the power of the signature to enhance their success in prevailing.