'I'M GOING GOLFING - PLEASE TAKE CARE OF THIS.'
by Curtis Pearsall
'I'm going golfing - please take care of this.'
'Take care of what?' I was going to respond. It was too late; he was already out the door.
This is exactly what happened to me at my first agency job. One of the producers asked me to handle a particular matter for one of his Commercial clients. The problem was that he didn't give me enough guidance or direction. I tried my best to figure it out. I don't remember exactly what happened after that, but the result wasn't disastrous.
Unfortunately, this is a common scenario in agencies around the country. With pressure on producers to sell, many of them have developed a knack for handling an account only to the point of the sale and then looking for a CSR (more appropriately called an account executive) to take it from there. While this doesn't sound unreasonable, problems arise when the CSR isn't familiar with the account or the client's insurance needs.
I firmly believe that CSRs are more important to agencies than anyone gives them credit for. CSRs are underpaid and under appreciated.
Here are some possible scenarios in which an E&O claim can result because the CSR errs because an agent or producer doesn't advise them completely of details pertinent to the file:
- A producer asks a CSR to write coverage on an account. Unfortunately, the producer never informs the CSR that a lease agreement requires the account (a tenant) to buy coverage protecting their landlord.
- A producer tells a CSR to issue a Certificate of Insurance to a Commercial customer. The CSR must release the certificate without the agent or producer ever reviewing the document for accuracy. If the Certificate isn't accurate and a loss occurs, the client might allege that they relied on the certificate as proof of coverage.
- A Commercial account needs a bond with a higher limit than the agency is authorized to write. With no producer to discuss this with, the CSR issues multiple bonds to equal the limit, only to find out that the bond company doesn't allow this. The contractor loses a job when the bond is thrown out. The contractor files suit against the agency for loss of business income.
- A cancelled account calls a CSR to say they need a Certificate of Insurance. The CSR issues the certificate, only to find out that the account misled them. Unfortunately, with a newly issued certificate, the account believes they have proof of insurance. They might be right!
How do we correct this? One approach is to take the CSR on calls on Commercial clients. The CSR will see the actual premises and meet the client. While this might not be practical in all situations, it's a great way to involve the CSR with the account.
Agencies should establish procedures for their producers to sit down with CSRs at intervals during the sales process and disclose full knowledge of the accounts to the CSRs. Even after the producer writes the account, they need to interact with the CSR to ensure accurate communication.
Producers need to make themselves available to CSRs so that CSRs don't feel uncomfortable with making judgment calls should a question arise.
Involve your CSRs. They deserve to know!
A version of this article originally appeared in the Utica National Insurance Co. E&O Bulletin and is reproduced with permission. Curtis M. Pearsall, CPCU, AIAF, can be reached at Utica National Insurance Group, P.O. Box 530, Utica, NY 13503, (800) 274-1914, fax (315) 734-2807, or e-mail [email protected].