A POTPOURRI OF E&O TIPS
by Curtis Pearsall
Now that the hard market is upon us, there’s no doubt that the Excess and Surplus Lines (E&SL) marketplace will be used to an even greater extent compared with the past couple of years. Curtis Pearsall’s document provides basic guidelines for your staff to follow in this unique industry.
KNOW THE E&SL MARKETPLACE
- Many E&SL carriers have an earned premium at inception. Don’t bind it unless your client knows about this requirement and definitely wants the coverage.
- With few exceptions, there are no Guaranty Funds. Make sure to bring this to the client’s attention.
- Know the rules for writing E&SL business in your state.
- Because most states have no regulatory authority over E&SL insurers, policy forms vary from one company to another. Be sure to check all forms and bring to your client’s attention any differences in the forms.
CHECK COMPANY-ISSUED POLICIES FOR ACCURACY
How comfortable are you with your companies’ quality of work? Whatever the answer, it’s always a good procedure to check the application against the policy not just for limits but for conditions, co-insurance percentages, and other vital information. Over the years, we’ve had a number of claims in which the agency failed to realize that the policy didn’t reflect the coverages desired until their client had an underlying claim.
KNOW YOUR COMPANIES’ BINDING AUTHORITY LEVELS
- When you have a number of companies, keeping track of binding authority levels for each one isn’t easy. Assign someone the responsibility of documenting the levels in an easy to read format and furnish each employee with this document.
- If you need to bind an account in excess of the company level, contact the company underwriter for their approval. Document the conversation, with a copy to the underwriter. If this situation arises again, follow the same procedure. Don’t assume that just because the company approved your request the first time that they’ll do so again.
NEVER SIGN THE APPLICANT’S NAME
As an agency CSR, I was asked to do this — and I did it because I didn’t know any better. Whether it’s a loss policy receipt or an application, never sign the applicant’s name!
BE HONEST WITH YOUR CARRIERS
Typically during a hard market, non-renewal of accounts increases as companies look to rid themselves of unprofitable business. When you market such an account to another company, offer full disclosure of the risks and hazards of the insured. Base your relationship with your carriers on honesty and trust.
DON’T RENEW ‘AS IS’
Your customers’ exposures might change. When the account comes up for renewal, interact with your customers to ensure that you’ve identified their exposures and have asked them whether they want you to insure them.
NEVER ADMIT LIABILITY
When a customer alleges that you’ve failed to provide the proper coverage, contact your E&O carrier for guidance. Any E&O carrier that’s committed to protecting you will be glad that you called and walk you through the process.
This article originally appeared in the Utica National Insurance Co. E&O Bulletin and is reproduced by permission. Curtis Pearsall, CPCU, AU, ARM, AIAF is vice president, E&O, Utica National Insurance Group. He 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].