AOA News, Views, Tips & More
By Curtis Pearsall of Pearsall Associates Inc. Also see his article,
"Specialization - a win - win scenario? Maybe not"
It is critical to take your documentation to the next level.
For many years, the prevailing philosophy regarding the issue of documentation was essentially - document the conversation in the file / agency management system promptly and thoroughly. While many may contend that this has served the industry well for all of those years, this "school of thought" has some holes in it and unless these holes are plugged and plugged quickly, the dam could break taking the agency down with it.
One of the holes deals with the degree and thoroughness of the documentation. There have been many E&O claims where the documentation in the system read something like this - "spoke with insured regarding their homeowners coverage". What exactly does that tell you? Would you want to have your agency defended in litigation based on this statement? Probably not. This statement in your system does not advise 1) exactly who (the name should be part of the documentation) the conversation was with 2) exactly what was discussed and 3) exactly what was resolved. Are there any open items? If the insured is going to be getting back to you on an issue, when? Is coverage in place in the meantime? Essentially a good "test" for documentation: can another member of the agency review that documentation and know exactly what was discussed, what was resolved and what the understanding is between the two parties? If not, the documentation is falling short.
The other "hole" deals with misunderstandings between what they said and what you heard or vice versa. Face it, at the time of a claim, there is a good chance that the memory of your customer will not be as sharp as it used to be. They won't remember the conversation the same as you. May want to call it "selective retention". How does it get resolved?
The best approach is to document back to the customer (or carrier / wholesaler, etc.) in writing (e-mail / letter, etc.) the essence of the conversation. The discussion could involve an explanation of coverage or the modification on one of their policies or a host of other issues. By sending the customer a letter recapping the discussion with a statement such as the following, this should help to identify any misunderstandings:
Mr. Jones, per your request, we have deleted the physical damage coverages on your 2008 Toyota. If this is contrary to your understanding, please contact the agency as soon as possible. Maybe they only wanted collision deleted as they were taking the car off the road for the winter.
You can look to address these misunderstandings either before the loss or after it. Somehow, the conversation may be more professional if it occurs before the loss.
Take your documentation to the next level. Yes, it takes time but it could just make the difference in avoiding an E&O claim.
Financial Tip of the Month
By Mike Brady of the Brady Financial Group, LLC. Contact Mike at firstname.lastname@example.org
When considering the value of your agency don't overlook the importance of the Balance Sheet. Too often agency owners, who are preparing to sell their agency, focus exclusively on revenue and EBITDA and forget about the Balance Sheet. Depending on the type of transaction (stock or asset sale) the financial strength or weakness of your balance sheet can impact either the sales price or future liabilities the seller will have to pay with their sales proceeds. All agency owners, regardless of where you are in the life cycle of your agency should take the necessary steps to strengthen their balance sheet.
For more information visit the Brady Financial Group.
Insurance Coverage Tip
By Kristin Toto of Martin & Company
Increasing Occurrence of Data Breach Prompts Broadened Coverage
All companies store personally identifiable information to some level whether it is limited to their own employees or extended to include customers and clients. It is the company's legal and fiduciary responsibility to protect and provide a secure environment for that proprietary data; however, in recent years, there has been an increasing occurrence of incidents in which this sensitive data has been viewed, stolen or used by an individual unauthorized to do so. In the event of a data breach, companies are obligated, and in many states required by law, to notify the individuals who may have been affected by the breach. Data breaches can lead to a whole host of potential damages including law suits brought about by the affected individuals of the breach.
Central Mutual Insurance Company has identified the need for companies to protect themselves in the event of a data breach, and as a result, is now offering an expanded Data Breach Coverage that provides first party insurance coverage that includes legal and forensic information technology review of the breach, notification to the affected individuals, as well as toll-free help lines and credit monitoring services to the affected individuals. For those who become identity theft victims, Central Mutual also provides identity restoration case management services. Through this expanded product offering, Central Mutual is also providing coverage for defense and settlement costs in the event that affected individuals sue the insured.
To view more "hot trends" in the Property & Casualty Insurance Marketplace, visit: Martin & Company's Market Trends & Updates.
Kristin A. Toto
Insurance Product Research & Development * Martin & Company
Tel: (610) 325-4455 * Fax: (610) 325-4405 * www.martincompanyus.com
How often does your agency participate in E&O Risk Management training?
As required by my E&O carrier to obtain a discount 33%
Every 3-5 Years 7%
This month's poll question:
What would your firm consider to be the most important item in making a change to a new E&O Insurance Carrier?
Financial Strength/AM Best Rating
RiskSmartSolutions - Risk Management Tip
By Charles T. Wilson of RiskSmart Solutions®
See also his article, "2012 Risk and Protection Checklist."
Help your clients organize their priorities for the New Year
Here's a short checklist of 7 Risk and Protection reminders they can actually implement:
1. Update asset lists
2. Update values
3. Schedule key dates
4. Review insurance protections
5. Update safety
6. Prioritize HR issues and Training
7. Update Emergency plans
Contact Charles at Charles@risksmartsolutions.com, 510-685-3883 or visit www.risksmartsolutions.com.
E&O Loss Prevention Tip:
Description of Claim:
Issues that can arise when using a wholesaler
Allegations against the Agent: The underlying insured, a trucking company, requested that our agency procure a $5,000,000umbrella policy. The agent went through a wholesaler to procure the coverage. The insured agency had limited experience with this specific wholesaler. The agency issued a certificate of insurance to the underlying insured prior to getting any written confirmation that the policy was issued. This was done on or around 7/1/2008. On 8/24/2008 one of the driver's for the underlying insured was involved in an auto accident. When the claim was reported to the carrier, it was discovered that the umbrella policy was never procured.
It was later determined that an employee of the wholesaler had issued a fraudulent quote, declaration page and other documentation to reflect that the coverage was in force. The wholesaler is uninsured and the insured agent, as the retail agent, became the target defendant for failing to procure the coverage as requested. It is alleged that the agent fell below the standard of care in issuing a certificate of insurance without having confirmation that coverage had been placed, and failing to do his due diligence in researching this wholesaler.
The underlying loss: The underlying insured's driver was involved in a fatality accident and was found to be at fault.
Damages: In excess of $5,000,000
Brought to you by:
CalSurance Associates - A Division of Brown & Brown Program Insurance Services, Inc. - Email: email@example.com, Phone: (800) 745-7189
Social Media Tip
By Cynthia Cavoto of Firebrand Social Media.
Here is this month's cost-effective and easy SMM (social media marketing) idea to benefit all website businesses:
Facebook Advertising: It's the most cost-effective SMM tool obtainable to website owners. With its outreach of over 300,000,000 users, Facebook allows small companies to build up a presence for themselves upon a powerful platform which connects them with a big worldwide potential client base. You can sign up for a Facebook Business Fan Page account utilizing your business's username to register the business. Read every one of the rules for Fan Pages, study the competition then evaluate the Facebook presence of your rivals. And just copy their plan for success by personalizing it for your targeted audience.
This month's EBook is entitled, "Link Building Secrets" we know you'll find this information valuable for your business.
Each month, we will feature a brand new Social Media EBook that contains valuable information on how you can harness the power of social media. Each featured EBook will contain a wealth of information that will include such topics as Facebook, LinkedIn, Twitter, Email and Blogging to name a few. Contact Cynthia at firstname.lastname@example.org.
Commercial Prospecting Tip
By Christa Colt of myrelevent.com - Putting Science in to Cold Calling
Diary of a Commercial Telemarketer
Christa Colt is the Lead ASR at ClearData, the Insurance Industry's leading commercial telemarketing company and a partner of AOA. Christa's team spends their days scheduling appointment's for insurance agents across the US and these are her tips... Christa says - Electricians, plumbers, lawn care, HVAC, contractors of all types are highly sought after by most insurance agents. The owners of these businesses however, can be very difficult to get a hold of. I've had my best success calling contractors when they are on their way to the shop or job site. This is usually between the hours of 7:30am & 9:00am. I will try them again between the hours of 4:00pm & 5:00pm when they are driving home from work. A little know trick for reaching outdoor contractors is to call them on a day that it is raining... If you would like to have my team working for you please give us a call at 866-586-2088 x100 www.myrelevent.com
Motivational Quotes (New Feature)
By Michael Mercer, Ph.D., provided AoA with Motivational Quotes and Joke-of-the-Month. He is author of "Hire the Best & Avoid the Rest" plus 5 other books. You can subscribe to "Dr. Mercer's Management Newsletter" at www.Pre-EmploymentTests.com.
Also available this month is Dr. Mercer's article, "3 Steps to Hire the Best People for Your Training or Apprenticeship Program"
"The simple things I do are actually all complicated."
- Peter Townsend
"If I'd asked the consumers what they wanted, they'd have said a faster horse."
- Henry Ford
"Nothing great was ever achieved without enthusiasm."
- Ralph Waldo Emerson
"The hurrier I go, the behinder I get."
- Amish proverb
I'm having amnesia and déjà vu at the same time. I think I forgot this before.