E& O for Cancelled Policies

[wies0106]

Hello everyone.

Our agency recently had a discussion due to several changes to a few of our carriers.

Some of our companies now send weekly emails to us warning what insureds are cancelling due to non pay or other underwriting requests not being completed.

I am wondering how other agencies handle these requests because if you handle some but not all this can be a huge E&O issue.

Its less work to take care of not letting these cancel with the future issues some customers will have with us but could get us apparently in trouble.

 

[DHK]

Some of our companies now send weekly emails to us warning what insureds are cancelling due to non pay or other underwriting requests not being completed.

I am wondering how other agencies handle these requests because if you handle some but not all this can be a huge E&O issue.

WHAT E&O issue?
- Did your advice harm the client?
- Did you misinform the client?

How can a non-paying client create an E&O issue?
What...
- "My agent didn't tell me I had to pay for my coverage?"
- "It's my agent's job to tell me when I have to submit premium for my coverage in addition to the mailed notices from the companies?"
- "I'm supposed to meet the other underwriting requirements, but I didn't, so now it's my agent's fault that I didn't get coverage in the first place?"
- "It's my agent's job to babysit me, spoon feed me, and take care of me because I'm incapable of doing it myself?"

If the client doesn't follow through on their EASY TO UNDERSTAND parts of the contract... how can there be an E&O issue?

Document your files and if there's ever a complaint, submit your documentation.

I like Ben Feldman's quote: "If you have a problem, turn it into a procedure, and it won't be a problem anymore."

 

[wies0106]

From what I am being told with the cancellation warning both the agency and the customer get ahead of actually cancelling its E&O if we also reach out to warn some clients but not all.

 

[fed up]

Your customer will also receive a notice from the carrier about a cancellation so there is no E&O. Even if they have changed email addresses, phone numbers, or mailing addresses the requirement on the carrier is to mail notice and prove they did so. It is incumbent upon the client to provide updated information on a timely basis.

 

[wies0106]

So even though the carrier sent a notice out. your saying it is the agencies option to either also reach out to the customer or disregard and we wont be at risk of an E&O claim?

 

[DHK]

E&O is for errors and omissions.

Tell me where the error or omission is when a client gets a premium payment notice from the company?

Here's a playlist to review of a Ilya Lerma - a prosecuting attorney who sues insurance agents and financial advisors. Get a sense of what she sues over:

 

[rousemark]

Your customer will also receive a notice from the carrier about a cancellation so there is no E&O. Even if they have changed email addresses, phone numbers, or mailing addresses the requirement on the carrier is to mail notice and prove they did so. It is incumbent upon the client to provide updated information on a timely basis.

Don't be so sure.. First of all, anybody can sue for anything. They might not win but you will be out your defense costs.

It could easily be claimed that an agent has an obligation to service the business and that includes contacting the client in case of non payment or potential lapse. This is especially true if the agent holds himself out as a "broker" who represents the client instead of the insurance company.

As far as following up with underwriting requirements, why wouldn't you. If it was worth enough time to write, surely it is worth the time to get it issued in order to get paid on it. But, even then if a claim occurs while the underwriting is pending and the agent has not done anything to follow up, some might hold that he was negligent in conducting his duties.

 

[fed up]

I never said anything about underwriting requirements. I can't say how many times I have contacted a customer about requirements and be ghosted for weeks. If they don't follow through on requests for information, signatures, repairs, license numbers it is on them.

 

[wies0106]

Also I am not only talking new business , but current that could be 6 months in and they either get a new card or something happens to the billing info to cause a cancellation.

 

[rousemark]

I never said anything about underwriting requirements. I can't say how many times I have contacted a customer about requirements and be ghosted for weeks. If they don't follow through on requests for information, signatures, repairs, license numbers it is on them.

OP mentioned UW... .. I agree if you have done your best to make contact you have fulfilled your obligations but you need to make sure you document it..