Now that Hurricane season is upon us, there is certainly a greater likelihood that Mother Nature could cause a more significant number of your agency customers to suffer a loss of some type. As the old adage goes “nothing brings out an agent’s mistake as quick as a catastrophe”. Unfortunately, with this potential for a larger number of claims, there is also the potential for some of these claims to not be covered. As the calls start coming into the agency, tremendous care and attention should be given to how the agency staff responds to these calls.
When a customer calls to report a claim, a variety of scenarios can occur. They include:
There appears to be coverage for the loss. While the agency staff handling the matter may feel certain the claim is covered, caution should be exercised when commenting. Why? Technically, the agency does not have the authority to approve or verify coverage; that is a carrier duty. A response such as the following is suggested – “While I am cautiously optimistic that this claim is covered, I do not have the authority to make coverage determinations. That is the role of the carrier. I will report the claim and advise you as soon as I hear anything further”.
The loss does not appear to be covered. A denial of a claim is also not within the authority of the agency. These claims should be reported and let the carrier make that determination. I am sure there have been claims that technically were not covered where the carrier decided to honor the claim.
The agency staff member feels “responsible” for the claim not being covered. This scenario can certainly occur. Imagine a client that has suffered a loss and is in dire straits. The agency staff may clearly see that if the agency had recommended that the client buy some specific coverage, the loss would probably have been covered.
First, the agency does not make the buying decisions for the client; that is the client’s responsibility. During many weather-related events, when the claims were being reported to the agency, the agency staff member responded with a statement similar to “what you are reporting is a flood claim. How did we not offer you a flood proposal?”. This clearly borders on an admission of liability; not something you want to do.
How the agency responds to these type of scenarios has significant potential to be a key element in the litigation process if the matter rises to the level of an E&O claim. Oftentimes, during a hurricane event, numerous staff are asked to take on the responsibility of taking claims from customers. This is a common time where problems occur. It is suggested that the agency develop a document detailing the “do’s and don’ts” of taking customer claims and then discuss this issue in sufficient detail to educate everyone that may be involved in the taking of those customer claims.