Discussions between your insurance agency and your carriers / wholesalers – are you documenting them?

There is no doubt that every day, producers and CSRs are interacting with the carriers they do business with. There is key underwriting information being communicated,  coverages potentially being explained as well as instructions to bind / modify coverage.

Are these conversations being documented in your agency management system? Hopefully the answer to that question is “yes”. The next question and probably the most important one is “Are you documenting those conversations back to the carrier person that you have spoken with?” Failure to do this has become a key issue in a number of E&O claims.

Without this documentation, there is the potential for a misunderstanding between your agency and the carrier. For example: you have a client that wants you to bind $350,000 of homeowners coverage. You realize that with that carrier, your binding guidelines state that any risk with Coverage A of over $300,000 must be submitted to the carrier for their underwriting / approval, etc. In other words, technically, you do not have any binding authority for that risk. You contact the underwriter and explain to them the risk and they authorize your agency to bind the account. Great! You trust that the underwriter will remember the conversation exactly as you do so no documentation is sent.

You bind the account and before the policy is issued, there is a significant loss. The underwriter apparently does not have the same recollection of the conversation as you or maybe that underwriter is no longer even with that carrier. As a result, the carrier contacts you and states that they are going to pay the loss but then come back against your agency for binding them on an account that they will contend that they would not have written.

Imagine the impact that an e-mail from your agency to the carrier detailing the conversation that took place before the account was bound. It could and probably will be HUGE! Without this documentation, the matter could come down to your recollection of the conversation contrasted with the underwriter’s recollection. Who is going to win? Hard to say.

Since you don’t know which of your accounts is going to have the next loss, take the time and document the key conversations between your agency and the markets that you do business with. When a problem develops, you will be glad you did.

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