What keeps you up at night?

by Curtis M. Pearsall, CPCU, CPIA
Special Consultant to the Utica National E&O Program

The phone rings at the agency and you are advised that it is one of your clients is calling to report a claim. How does this make you feel?

Are you confident that the claim is probably covered because of the job you did in identifying all of the exposures and ensuring that the proper coverage was put in place or are you now suffering from a slight to heavy dose of anxiety wondering. Wondering if you did the right thing and identified the exposures; wondering if there was some confusion on whether the coverage was supposed to be put into place.

In a survey done a number of years ago by a prominent insurance journal, the answer to the question “What keeps you up at night?” the # 1 answer by a landslide was “Making sure that my clients are properly protected.”

Well, right about now, if you are doing some wondering, let me ask you…What are you going to do about it?” If you want to get serious in making sure that your clients are properly covered (or if they are not, at least you recommended the coverage and they said they didn’t want it), there are definite tools available to assist you. Essentially, the tool is called an Exposure Analysis Checklist. There are some excellent checklists out there, two of the more prominent systems are AMS Producer Plus (formerly the PS-4) and Rough Notes. Both of these fine companies have dedicated significant resources to the development and maintenance of checklists that are specific by SIC code. So if you are going to be targeting dry cleaners, the system has already identified all of the exposures that dry cleaners have enabling you to be the “expert” when you sit down with them to discuss their insurance program. If you are going after hardware stores, or auto dealers or churches, once again, they have already done the work for you by developing a checklist that you can use when you meet with the client. One of the many nice features of these systems is the definitions section for all of the insurance coverages. Thus whether you are a veteran in the business or just learning it, there is no doubt that you will find this definition feature very beneficial in understanding the specific coverages.

Another great feature is that these systems have the ability to generate a well designed proposal (typically in Word) for your client that includes all of the various exposures with the appropriate definitions. So not only are you identifying for your client the coverages they should have, you are helping to educate them on the various exposures they face. Are they going to buy them all? Probably not. So when they decline a specific coverage, just ask them to sign off that they have declined that coverage. This way, in the event of a dispute on whether coverage was requested or not, this sign off on the checklist is part of the file. Proper use of this checklist and the sign offs has the potential to be the strongest piece of evidence in your favor.

The checklists are for both commercial lines as well as personal lines. Sitting down with all of your personal lines clients is probably not realistic but by using the mail merge feature, you can get this checklist out to all of your personal lines clients as well. I read recently that 76% of the diamond rings in the United States are not insured. This checklist is a great way to bring to your client’s attention the availability of a floater. For your homeowners clients, advising them what is covered by their homeowners policy, what is not and what limitations there are. Once again, you are taking the initiative to educate your customers so that they truly understand their policies. Very powerful.

Both of the systems mentioned above (Producer Plus and Rough Notes) have letters specifically designed for a number of scenarios. You can these use these letters or develop your own…bottom line, solid professional tools are out there to help you.   

Is there a cost to these systems? Yes, but it is not a much as you think. Don’t think of these systems as an expense…they are an investment in your agency…in the growth and in the future. There is no doubt that you will sell more insurance and the commissions you earn will be much more than the cost of the system.  

As you can tell, Utica Mutual is a big fan of Exposure Analysis Checklists – if you are looking to avoid E&O claims or provide better protection should you be faced with a claim, they are as close to a silver bullet as there is. In fact, in addition to the additional commissions that you earn, Utica will also give you a premium credit on your E&O at your policy anniversary when you demonstrate that you have secured a system and are actively using it.

There is no downside to Exposure Analysis Checklists. If you are serious about growing your agency and protecting it at the same time, this could be just the answer. Also, you may just sleep better at night.