Last week, I received the following question from an agent in Florida:
“We have been checking downloads for years, however I have a person on staff that sees no value of checking the Renewal Downloads and has suggested a few times that we stop that process. She feels that since we do check New Business and Endorsements that the Renewal downloads should be downloaded pretty much with no errors. Would like to know best practices thoughts on this.”
In June, I created a new seminar/webinar based on my book “When Words Collide: Resolving Insurance Coverage and Claims Disputes” where I discuss the issue of QCing policy deliverables. I also address this issue in two other programs I do called “Finding and Fixing Commercial Lines Coverage Gaps” and “Finding and Fixing Personal Lines Coverage Gaps.”
My book and seminar/webinar by the same name focus on how to resolve insurance claims disputes. The best way to resolve claims disputes is to prevent them from occurring in the first place. In the seminar/webinar, I give several ways to do that, including three in particular:
Policy Form Drafting. Avoiding coverage and claims disputes begins with designing insurance contracts with policy language that is, as much as possible, clear and unambiguous. In addition to my book, another great tool is IRMI’s “How to Draft and Interpret Insurance Policies” which is available on the IRMI web site. I would hope that every insurance company that drafts some or all of its policy forms uses these two resources.
Exposure Analysis. I believe there are three primary sources of coverage gaps: (1) failure to identify exposures to loss, (2) failure to insure or risk manage known exposures, and (3) failure to QC policy deliverables. In the book, I give over 160 real-life examples, many of which being with the failure to identify or insure loss exposures.
Quality Control. When an account is placed with an insurer, the agent will request certain forms or coverages. When the final insurance product is delivered, the agent should QC it by examining (1) whether all requested forms/coverages are provided, and, (2) what additional forms have been added that were NOT requested. Carriers always attach forms that are not requested. Some of these forms are not good from the insured’s perspective. Some of them are mandatory according to underwriting/rating rules, but may be negotiable. The same is true for other optional forms the underwriter attaches to limit the perceived risk and premium…such restrictive or exclusionary endorsements may be negotiated as to removal or replacement by less onerous forms. In my “Finding and Fixing” seminars/webinars, I give dozens of examples.
One is by making sure you’ve recommended the proper forms to cover the exposures the customer wants to insure. These are the forms the agent requests from the carrier.
So, to answer the question above, it is critical to QC the final product from the carrier to make sure that requested forms are included and that undesirable unrequested forms are removed, replaced, or communicated to the customer. This is simply a sound E&O practice and it’s a service that distinguishes a good agent from a policy peddler.