In the vast majority of new business accounts (especially in personal lines and small commercial), it would not be the norm to include claims in the proposal discussions. However, since claims is where “the rubber hits the road”, it might be appropriate to at least advise the claims folks (assuming that claims is a separate division) of the degree of new business activity.
When the new business accounts become larger, the importance of the role of claims definitely becomes more significant.
For many E&O carriers, statistics are showing that the way agencies handle claims is generating a significant amount of E&O activity. This demonstrates that virtually everyone in an agency has the potential to cause an E&O claim.
Every agency has clients that generate their fair share of claims. Possibly, the account has a major products liability exposure or has a large property or liability exposure where frequency is the main issue. With new business, this scenario will normally surface when loss runs are secured. If this is the case, an agency should consider including the claims person in the sales presentation. At a minimum, the proposal should reference the agency’s claims staff and their expertise. This is also a good time where the claims staff should be aware of this new business opportunity.
Let’s presume that the agency secures a medium to large account that has a history of claims frequency. Let’s include in the presumption that the claims department in the agency knows nothing about the risk. Now the claims start pouring in and the claims staff is totally unaware of this new business account. This increases the possibility that these claims could overwhelm the claims staff resulting in a “less than totally professional” handling of those claims. When these “missteps” occur, there is greater potential for a problem that could result in an E&O claim.
Conversely, from time to time, an agency may lose one of these accounts. When these accounts leave your agency, is the claims department notified? Without this type of notification, the claims staff could continue to be involved in the handling of claims when they should not be.
Every agency plays a role in the handling of claims, whether that role is direct handling or an advocacy role for those situations that warrant it. For new business accounts, accounts that you lost or possibly where the account was moved to a new carrier, agencies should consider involving their claims department in the process. This level of communication should result in a more client-centric outcome.