Do
these trends pertain to you?
by Curtis M. Pearsall, Vice President, Agents' Errors and Omissions Department
Recently, I asked one of the many quality
counsel that Utica uses to defend our customers for his perspective on
some trends that he has seen through his defense work with Utica.
After receiving and reviewing this information, I concluded that the trends he cited probably did not meet the definition of a trend because these types of errors have probably been around for more than just a few years. In fact, the real trend probably is that some agents keep doing things the same way as in the past but today are expecting different results. I think that someone coined this as the definition of "insanity."
One area that seems to be particularly troublesome with
large commercial agencies is delegating the review of insurance policies
and preparation of proposals to a CSR without review by the agent to verify
that the policy/proposal provides the coverage
requested or previously afforded when the coverage is renewed. This scenario
reared its ugly head in a recent claim where the carrier increased the
co-insurance requirement from 80% to 100%, deleted the agreed amount coverage
and changed the coverage from actual cash value to replacement cost. All
of these actions were not "caught" by the agent and obviously
all of them were to the detriment of the insured. The amount of the damages
that the Plaintiff is looking for are in excess of $5,000,000!
In my conversations with agents, it appears that the level of quality and service coming out of the insurance industry has significantly deteriorated over the past couple of years. So a word of caution for insurance agents - establish a procedure for checking company-issued policies (new or renewal) to verify that the correct coverages are being provided. Certainly DON'T ASSUME that the policies are accurate. In fact, assume that they aren't…you are better off.
One trend that has increased over the past couple of years (due to the age of the Internet) is the language that agents use on their proposals and websites. Obviously, agents want to impress the buying public by marketing themselves as "experts" and use words such as "advise," "analyze" and "recommend." I am here to tell you that if this is what you do, fine. If you don't do it, don't say you do because a smart plaintiff's lawyer (they are out there!) will uncover it as part of the discovery of an E&O claim. Your proposals and websites should reflect the current legal precedent.
Last,
but by no means least, more and more agencies are going "paperless"
through computerization. Most agents are great about inputting all phone
calls into their system. The problem is the detail that is entered. Don't
just input, "...spoke with Curt regarding Business Income,"
instead note, "...spoke with Curt regarding Business Income and he
indicated that he cannot afford it and does not want the coverage."
Now, claims against agents do happen. Although this is
not necessarily a trend, a piece of advice that I would like to offer
if you are faced with or think you will be faced with an E&O claim...CONTACT
your E&O carrier first! When you buy a policy from an E&O carrier,
you have a right to get more than just a policy. You are entitled to guidance
and direction if a claim is made against you. It is important not to speak
with or produce documents for your customer's and/or insurer's attorney
without the benefit of counsel provided by your E&O carrier. By doing
so, this can create a situation that could impact the direction that the
E&O claim will then take.