In reading E&O claims over the years, a significant number seem to involve customers that after a claim, look to blame their insurance agent for any lack of coverage or coverage shortfall. Actually in my E&O classes, the # 1 frustration of the CSRs and producers in attendance is the lack of responsibility or accountability their customers are taking for their buying decision. If agencies could find a way to increase the responsibility that their customers take for the coverage they have (or don’t have), many E&O claims would either go away quicker or possibly never develop at all.
Is there a way? Actually there is!
Obviously documentation is a big piece of the equation but to truly make a difference in reducing your E&O claims potential, it is necessary to take documentation to the next level.
Imagine that your customer called to delete a specific coverage (comp and collision on their Chevy Corvette). You document that request in the system and proceed with ordering the endorsement. A month later, the vehicle is stolen. When the customer calls to file the claim, your agency advises them that there is no coverage because comp and collision had been deleted. The customer’s recollection of the conversation is that they wanted collision to be deleted but they still needed comp since they were putting the vehicle up for the winter. What if after the original phone call, the agency would have sent the customer a letter / e-mail advising them that “per their request, you are deleting comp and collision on the Corvette”. If this is not correct, please contact the agency immediately”. Would this have made a difference? Definitely. This documentation back to the customer would be instrumental in identifying any potential misunderstandings between what the customer told you (or thought they told you) and what you heard. If an E&O claim still developed, this written communication back to the customer would have been a huge part of the agency’s defense.
Other ways to get your customers to be more accountable:
– REQUIRE that they REVIEW the app and then sign it. There is tremendous power to a signed application as customers will typically be held accountable for the contents of the app. Don’t just ask them to sign the app, require that they REVIEW it and then sign it.
– Provide your prospect / customer with limit options and require that they clearly indicate which limit they are selecting and which limits they are rejecting. There have been many claims where the agency customer was not aware that higher limits were available.
– On all business, new and renewal, send a cover letter with the policy requiring the customer to read the policy and if there are any questions or areas in need of correction, that they should contact the agency immediately. Other appropriate issues to include in the letter:
– “All limits were selected by you (the customer) and that the agency cannot guarantee that the limits will be sufficient in the event of a loss”
– Higher limits are available.
The cover letter should be basic – DO NOT recap the coverage as this essentially implies that the customer does not need to read the policy since you are telling them what is in it. Also mistakes could occur resulting in the cover letter not accurately stating the actual coverage.
Take steps to make your customers more accountable for their buying decision. They could just make the difference if a problem develops in the future.