Are you making notes on your proposals?

Typically, when producers review the proposal with the prospect / client, as the discussion evolves, and decisions are made, the producer will make notes on the proposal. The notes could involve requests for additional information, coverages accepted / rejected, etc.

It is probably fair to say that these notes may not involve full sentences; they are probably words that at the time of the discussion, the producer knows what they mean by the words noted.

Fast forward 6 months and let’s presume there is a question on what was meant by the notes, how confident is the producer going to be on what was meant on a conversation that occurred 6 months ago? Unfortunately, this occurs with some degree of frequency and when the issue turns into an E&O claim, the manner in which these issues get resolved can have a HUGE impact on the direction an E&O claim takes.

Here is a recent example I am aware of:

The proposal indicates a variety of other coverages for the client to consider and the producer is reviewing those coverage to find out whether the client would like a quote or policy on any of those available coverages. For 9 of the 10 coverages noted, it is clear what the intent is. However, on one, neither the “yes” box or the “no” box were checked (let’s assume the coverage noted was Employment Practices Liability). There was simply a notation of “$300,000”. What did this “$300,000” mean? Well that is where things took on different variations. The resolution was critical because the client had suffered a claim involving this coverage.

The producer’s version was that the client had Employment Practices coverage already with a limit of $300,000. The client’s version of the discussion was that he asked the producer to get them a policy for a limit of $300,000. How this will ultimately get resolved is not clear at this time.

The key issue for producers to be aware of is that at any point in time, they may have to explain what is meant by virtually every handwritten note made on the proposal form. There is a good chance that it will be an attorney asking them these questions. So, if you are making notes on the proposal form, make sure the notes are clear. The best practices option to consider is to have a document (e-mail / letter, revised proposal, etc.) that is sent to the client that memorializes the discussion the agency producer had with the client. This will go a long way towards addressing any potential misunderstandings.

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