E&O Weekly Prevention
Strategies for the Professional Agent
  
October 11, 2012

 

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Letter from the Editor

  
This week's edition of AOA E&O Prevention:

 

Learn what you need to know to protect your clients in 2013. "DRI's Professional Liability Seminar" is dedicated to addressing the educational needs of attorneys and insurers who protect the interests of all types of professionals, from lawyers and accountants to insurance producers and those involved in the construction and design industry. This seminar will be in New York on December 6th & 7th and will include leading experts in the field who will provide important updates to ensure that you have the information you need. 

 

 

Table of Contents    

  

Insurance Agent's Misrepresentations at Time of Sale Binds Insurer Notwithstanding Contrary Policy Exclusion

By Matthew R. Watson, Esq.

 

By Elizabeth M. McGarry, Esq.  

  

In Bad Faith Action, Statute of Limitations Starts to Run When There is Exposure to Damages 

By Thomas Paschos, Esq.

 

By Sandy Smith Esq., & Fred Pomerantz, Esq.,

 

 

Check out this week's edition of World Risk & Insurance News at WRIN.tv.

 

AgentsofAmerica.ORG has partnered with WebCE, a leading nationwide provider of Continuing Education for insurance professionals, to provide you with state-approved self-study CE courses to satisfy your CE requirements online! Check out your CE State Requirements.

  

Also available is our most recent edition of "AOA Tips, Views, News & More," including our new feature "Insurance Resources." & "Recommended Reading".  Remember that membership in AgentsofAmerica.ORG is FREE! Also if you have any thoughts, comments or suggestions, please email me at info@agentsofamerica.org

 

"Bringing the Best Together"

 

Britton D. Weimer, Esq.


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AOA News, Views, Tips and More

 

E&O Tip 

By Curtis Pearsall, CPCU, AIAF, CPIA of Pearsall Associates

 

Breaking news story - Insurance carriers are suing their agents!

 

No, this is not just a headline to get your attention. This is a reality for many agencies. Why does it happen? Could it happen in your shop?

 

Certainly in the majority of these situations, this occurs where the agency has bound the carrier to a risk that is outside of the carrier's underwriting guidelines. Using homeowners to illustrate the issue, this lack of adherence to the guidelines could involve a multitude of areas such as age of the home, type of construction or maximum limits. Before the carrier can address the issue, the house suffers a major loss. The carrier could come back and allege that they would not have written the risk based on various circumstances.

 

In many of these claims, during the discovery process, the agent emphatically stated that they had spoken to the carrier underwriter on this risk and received permission to bind even though the risk was outside of the guidelines. Unfortunately, in most situations, there was no documentation in the agency file or a note back to the carrier underwriter.

 

How could these claims have been prevented? Obviously, it is important to know your carrier guidelines. There is no doubt that they can vary from carrier to carrier so don't presume that they are the same. Also, since these guidelines can change, especially as a market hardens, ensure that you have a procedure in your office to keep the staff up to date on the changes.

In addition, where you have a risk that is outside of the carrier guidelines and you receive permission, the okay from the carrier, to bind the risk, send them a note (e-mail is suggested due to the speed of the delivery) detailing the discussion and what was agreed upon. Include a statement that if your understanding of the conversation is not correct, that the underwriter should advise you promptly. This puts the responsibility on their shoulders and will serve as solid protection of your agency.

 

It is highly recommended that anytime that you interact with your carriers (or wholesalers as well) on risk characteristic or coverage issues, be sure that your file reflects the essence of the conversation. There is no doubt that documenting the conversation back to the carrier takes time but it is time well spent. With this type of documentation in the file, there is a good chance that the E&O claim will not even develop. If it still does, that the odds of a successful resolution in favor of the agency have been substantially increased.

 

For additional information, contact Curtis at curtis@pearsallassociates.com or visit Pearsall Associates.  

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Mental Health Conditions in the Workplace

By Deborah Dutton-Lambert, MBA, PC, CRC founder of Encompass Training Program    

 

TIP OF THE MONTH

 

An effective way to help your employees who may be struggling with depression is to provide easy access to reliable depression screening tools.   These tools could be shared through a wellness newsletter or perhaps at a wellness fair.  An early recognition and intervention strategy to address depression in the workplace is essential  for the health of employees and the financial strength of the organization.  The tools listed are from the Mayo Clinic and Mental Health America.  Both are effective in helping employees identify depression and both encourage the employee to seek treatment if indicated.

 

http://www.mentalhealthamerica.net/llw/depression_screen.cfm

http://www.mayoclinic.com/health/depression/MH00103_D

 

For additional information or to contact Debbie go to "Contact Us"

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Send the Proposal Just Before the Telephone Call or Video Call

By Mark Hunter, "The Sale Hunter" 

 

Sending the proposal too far ahead of your call allows the customer time to make a decision without you.

 

You've spent too much time and effort the get the prospect to agree to a conference call with you.

 

You've taken the time to work up several ideas which you know they will like, and the customer asked for you to send them the information a day or even several days before the call.

 

Big mistake.

It's important for you to control the call.

 

The worst case is the customer reviews what you've sent them in advance, only to have them make up their own mind without talking to you. This is a much bigger problem than we realize and it happens to all of us for one simple reason - we want to be seen as accommodating to the customer.

 

The set up is simple.

You're talking with the prospect on the phone. They're interested to see some ideas from you, but when comparing calendars, the first time both of you can talk on the phone is in another week. Without hesitation you blurt out that you can get them the plans in the next day or two.

 

It's natural. I've done it, all to show the customer how easy I am to work with.

Solution to this problem is simple. Get the time for the conference call set up first, and then say you'll start putting some information together.

 

Share with the customer it will take you some time because you want to get them the best ideas, etc. Go on to say how you'll be able to get it to them ahead of the call, but most likely not by much.

 

I've found if you're upfront with them and explain how it's going to take time, they'll be fine with it.

 

An hour or so before the call, you then email them the information you intend to review with them on the call.

 

If the customer is comfortable using a meeting tool such as "Go To Meeting" or something similar, then use it. This way you can walk them through the materials using your own computer screen.

 

Key is for you to control the flow of information and provide the customer with the opportunity to cancel a meeting on you at the last minute, due to improper conclusions they draw from something you've sent them.

 

Mark Hunter, "The Sales Hunter," is a sales expert who speaks to thousands each year on how to increase their sales profitability. For more information, visit www.TheSalesHunter.com. You can also follow him on Twitter, on LinkedIn, and on his Facebook Fan Page, or call 402.45.2110. -Mark@TheSalesHunter.com

 

Copyright 2012, Mark Hunter "The Sales Hunter." Sales Motivation Blog

Articles 

A1Insurance Agent's Misrepresentations at Time of Sale Binds Insurer Notwithstanding Contrary Policy Exclusion                                            

By Matthew R. Watson, Esq.

 

In March 2006, the insured met with an insurance agent to prepare an application for homeowner's insurance. The insured had an existing homeowner's policy, which afforded $500,000 in personal liability coverage. Although the insured did not wish to change her coverage limits, she was interested in finding a plan with lower rates.  

 

  

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article3In Bad Faith Action, Statute of Limitations Starts to Run When There is Exposure to Damages  

By Thomas Paschos, Esq.

 

In Katzenmoyer v. Allstate Ins. Co., unpublished, 2012 WL 3764998 (E.D.Pa., August 30, 2012), the underlying incident occurred eleven years ago when Allstate's insured, Donald Drumheller ("Drumheller") invited Katzenmoyer to ride on his ATV through a wooded area near his house. He then drove the ATV into a raised manhole cover. The impact threw Katzenmoyer from the ATV and caused her to suffer serious injuries. Before filing suit, Katzenmoyer wrote to Allstate and requested that Allstate tender policy limits in exchange for a release. Allstate refused and filed a declaratory judgment action against Drumheller alleging the ATV incident occurred away from the insured premises, and denied coverage under its policy. The trial court granted Allstate's motion for summary judgment, concluding that Allstate homeowner's policy imposed no duty to defend or indemnify Drumheller in the underlying litigation.

 
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By Sandy Smith Esq., & Fred Pomerantz, Esq.,

 

On July 18, 2012, the New York Department of Financial Services (Department) sent a New York Insurance Law section 308 request (308 Request) to 80 New York domestic life insurance companies, requiring them to provide, by August 8, 2012, in substance the following: 

 
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This newsletter is produced in conjunction with Agents of America, www.agentsofamerica.org. The contents of which may not be reproduced without the express written permission of Agents of America. Copyright 2012