As most agencies would agree, the insurance proposals you generate for your prospects / customers are extremely important. After all, they could make the difference between securing the account or not.
Proposals are also an extremely important document when it comes to potential E&O litigation. There is no question that both the defense attorney (defending your agency) and the plaintiff’s attorney (defending your customer) are going to request this document and will review it to see not only what it says but, equally important, how it says it.
First, in the development of the proposal, some agencies have been known to take last year’s proposal and do a series of cutting and pasting. This is definitely not suggested as it can lead to issues / coverages / incorrect statements, etc being carried forward and making the proposal inaccurate. Since most agency management systems have a proposal template included within the system, the suggested approach is to use that standard template for both new and renewal proposals. The standard template / format should include disclaimers, key conditions (such as what is necessary to bind) and other key language. This ensures that these important statements are included on all proposals.
Bottom line, the proposals should be started “from scratch” and developed using the most current coverages and exposures.
The language used is equally as important so agencies should develop their proposals with this in mind. Many years ago, the term “all risk” was common and created a host of E&O claims as it implied that “everything was covered” when we all know that this was not the case.
It is best to develop your proposals understanding / assuming that the prospect is not as knowledgeable about insurance since this is probably an accurate position.
Look to find ways to provide definitions of key phrases or various abbreviations used. While your agency may know what co-insurance means, it is fair to say that you may have a prospect / customer that does not understand this key phrase and it’s tremendous implications. Actually an effort should be made to avoid the use of abbreviations unless they are referred to and explained further in the proposal.
Proposals are usually utilized to advise customers of other coverages that they should consider. Actually when making reference to these additional coverages, use the phrase “other coverages to consider” as opposed to “recommend”. A disclaimer such as “coverages to consider include but are not limited to the following” should be included. This clarifies that the list is not a complete list of all available coverages.
Lastly some agencies use carrier issued proposal as opposed to generating your own. While this is acceptable (more so for the smaller accounts), it is important to realize that the carrier issued proposals probably do not include the necessary disclaimers, conditions needed to bind, etc. So if your agency takes this approach, be sure to include a cover letter that contains all of this key language.