There are three goals to the cancellation procedures. They are as follows:
- Determine the cause so that the agency can prevent future erosion of business
- Protect the agency from an E & O exposure caused by incorrect termination of coverage
- Regain the account on the next anniversary, if possible
Most agencies plan, measure and record the sale of new business, but very few take the time to really control the loss of business to the agency. It is the opinion of our firm that no agency really profits if business keeps coming in the front door and going out the back.
Next, it is important to realize that unless there is proper documentation, a not covered loss will usually result in an Errors and Omissions claim being filed against an agency. Since most E & O deductibles are well over $1,000, it is in the best interest of the agency to not add insult to injury. That is, lose the account and then suffer another monetary loss with an E & O deductible.
Finally, it is important when a policy is cancelled that the CSR/Marketer or the Producer decide whether or not this customer is to be resolicited. Many customers that leave an agency regret their choice, but fail to return to the agency, because they are too embarrassed for leaving in the first place.
This embarrassment can be easily overcome by conducting a cancellation interview and by resoliciting the account on the next anniversary. This will usually make the client a better customer.
CANCELLATION PROCEDURE
COMPANY REQUEST
1. Upon receipt of cancellation notice, the CSR/Marketer or Producer contact customer to determine the following:
- That they received the cancellation notice
- That they know how coverage can be reinstated, if in fact it is possible
- If the customer caused the policy to be cancelled (non payment of a direct bill premium) and do not want a reinstatement, why the customer wished the policy cancelled and what they plan to do for their coverage
2. If customer wishes the coverage to be reinstated, CSR/Marketer determines if company will allow the reinstatement.
3. CSR/Marketer or the Producer informs customer on phone and in writing how reinstatement can be achieved.
4. If reinstatement is impossible, the CSR/Marketer or Producer should propose submitting application to a new carrier, if possible. (See New Business Procedure <<IMS02637>>)
5. If policy is not to be reinstated or rewritten, CSR/Marketer or the Producer determines from customer the reason and enter this in a cancellation log.
6. Once the cancellation is effective the CSR/Marketer notes the lapse of coverage on the customer's electronic file, put a reference on the note pad and file the paperwork in the transactional file.
7. CSR/Marketer sends letter to customer telling them of the lapse in coverage and resolicits their business if desired.
8. CSR/Marketer establishes a suspense date 120 days prior to the next anniversary of the coverage to resolicit coverage, if the agency desires to regain the customer.
9. If the agency does not desire to retain the account, the CSR/Marketer so notes on the customer's electronic file and deletes all follow ups.
CANCELLATION PROCEDURE
AGENCY REQUEST
1. The CSR/Marketer calls the company and requests that they send a direct notice of cancellation
2. CSR/Marketer confirms in writing that policy is to be cancelled by direct notice of the company.
3. CSR/Marketer sets up a suspense of 6 days for receipt of cancellation notice.
4. If notice is not received, follow up with company and resuspense for an additional 6 days.
5. When cancellation is received, review for correctness and note the effective date of cancellation on customer's electronic file.
6. If agency has requested cancellation for non payment of an agency billed premium, set a suspense date of 1 day prior to the effective date of cancellation to check with bookkeeping to determine if premium has been paid.
7. If the payment has been made, CSR/Marketer should notify company in writing and on the phone to reinstate the policy or coverage.
8. If policy is not to be reinstated, CSR/Marketer notes the cancelled status of the account in the customer's electronic file.
9. If the cancelled policy requires an audit, CSR/Marketer sets up a 45 day suspense to await the final audit figures.
10. Once cancellation is final and (if necessary) the audit is received, CSR/Marketer bills the customer for any additional premium or sends unearned premium to customer.
11. CSR/Marketer then removes all suspense items, notes transactions on the customer's note pad and files all paperwork in the transactional file.
CANCELLATION PROCEDURE
CUSTOMER REQUEST
1. When request is made by the customer the CSR/Marketer should request that the customer return the original policy, along with a signed letter outlining the date the cancellation is to be effective and the reason for cancellation.
2. If the customer does not have the original policy, the CSR/Marketer sends a Lost Policy Release form to the customer with Cover Letter and a copy to all additional insureds.
Dear :
Re:
Enclosed please find a copy of a Cancellation/Lost Policy Release form for the above captioned policy. Please sign where indicated and return to us for immediate processing.
If you have any questions concerning this, please do not hesitate to contact me.
Sincerely,
3. CSR/Marketer sets a follow up for 10 days.
4. If CSR/Marketer does not receive the original policy or Lost Policy Release from the customer, a follow up letter is sent and a new follow up is established in 10 days.
5. When original policy or Lost Policy Release is received from the customer, the CSR/Marketer sends original to the company and updates customer's electronic file to show the suspension of coverage on the effective date of cancellation.
6. Set follow up for 45 days to receive the cancellation credit memo or cancellation audit from the company.
7. When credit is received, CSR/Marketer invoices the return premium and requests the bookkeeper to refund any premiums due the customer.
8. CSR/Marketer or the Producer determines if this is an account that the agency wishes to resolicit on the next anniversary.
9. If the account is to be resolicited, CSR/Marketer sets a follow up 120 days prior to the next anniversary.
10. If policy is not to be resolicited, CSR/Marketer deletes all follow ups.
11. Once cancellation is finalized, it is recorded on customer's note pad and all paperwork is filed in the transactional file.
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