In light of the September 11 tragedy, a coverage review of all of your accounts is more vital than ever, for you and for your clients. In this document, Curt Pearsall discusses the areas that you should emphasize, and methods for ensuring that you’re covering everything that you should.
Back in July 1994, I wrote a loss control article with this title that began by asking agents: 'When you insure an account, whether it be Personal Lines or Commercial, P&C or Life, do you discuss insuring the worst that could happen?' The article discussed floods, earthquakes, and other catastrophes that we’ve experienced periodically in our lives.
September 11 has rewritten the definition of 'the worst.' Although there’s no doubt that America will recover from this tragedy, it’s important that we learn from this tragedy in marketing and selling our products.
As buyers of insurance, we typically secure coverage for perils that occur with some degree of frequency (fire, theft, liability, etc.). We’ve had a tendency to not buy protection against an event that seemed very unlikely to occur. In light of the events of Sept 11, if you haven’t been performing an exposure analysis review with your clients, now’s a good time to start.
For your Commercial accounts, this usually involves a face-to-face discussion in which you review their coverages and the exposures for which they’re uninsured. Many of the top agency management software systems have detailed lists of exposures by class of business. These provide an excellent foundation with which to work. For your Personal Lines accounts, if a sit-down discussion isn’t practical, use written communication to get the message out. Advise them on what is and isn’t covered and encourage them to contact your agency if they want broader coverage. In either case, whether verbally or in writing, raise this question: 'What’s the worst that could happen?'
Getting back to Commercial Lines, I’d guess that many of the businesses in the World Trade Center weren’t concerned about carrying extensive amounts of Business Interruption coverage. After all, they were in the World Trade Center, so what was the worst that could happen? Sadly, we now know.
Coverage reviews offer several benefits:
- Effective E&O loss prevention. Written proof that a customer rejected a coverage you offered will certainly help your defense.
- Additional revenue. Let your customers make the decision on the coverage(s) they want and need. You might be surprised at how many will buy additional coverage.
- Professionalism. Show your customers that you’re a professional insurance agent.
On a different note, many reinsurers are considering terrorism exclusions. If this happens, some companies might need to pass on these same terms and conditions to your customers. Be on the lookout for notices from your carriers on this issue.
Although I always advise agents to review every policy before sending it to their insureds, these evaluations will become essential to identify any significant changes in coverage that you’ll need to bring to your customers’ attention. The adoption of a federal terrorism reinsurance program might change this situation.