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E&O And Policy Changes
In this document, Mike Edwards examines the E&O implications of mid-term policy changes. Edwards presents two E&O cases that illustrate the hazards of not verifying information or instructions with insureds or third parties. Making mid-term policy changes is a normal part of the insurance agency business. In fact, it's so routine that there's a danger of making ordinary, perfunctory policy changes without considering the potential E&O exposure. In particular, there is a big E&O risk when making policy changes based on information or instructions (or lack of information or instructions) from third parties. ACTUAL CASE #1 A car dealer calls the agency to report that an insured of the agency is in his office, and in the process of trading cars. The car dealer has the insured's Auto ID card, with the correct policy number. In addition, the agency person can hear the insured talking in the background, so there's no reason to doubt the legitimacy of the call. The agency takes the necessary information on the new car. The car dealer also informs the agency that the insured is trading in his older car. Based on this, the agency also deletes the older car from the insured's Auto policy. Several days later, the insured calls the agency to report a serious accident involving the older car. It seems that during last-minute negotiations with the car dealer, the insured decided against trading the older car, opting instead to sell it himself. The agency hadn't yet sent the insured a copy of the Change Endorsement, and the insured denies instructing the agency to delete the older car. RECOMMENDATION In this situation, the simplest approach would probably have been to ask to speak directly to the insured. That way, the agency would've been acting on direct instructions from the insured. The burden would then fall on the insured to countermand the original instructions to delete the older car. ACTUAL CASE #2 An insured calls the agency to report receiving a very expensive diamond bracelet. The agency informs the insured that the insurer requires an appraisal in order to schedule the jewelry. The insured states that they will call the jeweler and have them contact the agency. Three months later, the insured calls to report that the bracelet was stolen in a burglary. As it turns out, the jeweler never contacted the agency. Also, the agency didn't suspense the item or conduct any follow up. In addition, the CSR who originally handled the call has since left the agency. The agency manager did, however, find an entry in the insured's database logging in the original call, so there's no doubt that the insured called the agency. RECOMMENDATION In any situation in which coverage can't go into effect until the agency receives additional information, it's critical to inform the insured of this fact, with documented follow up as necessary. Next, any pending transactions such as this must be entered into suspense, and followed up on in a timely manner. Finally, it might've been wise to advise the insured to have the jeweler send the appraisal directly to them. They could've then forwarded it to the agency. One advantage of this approach is that the insured would certainly know whether or not the jeweler had done the appraisal.

The Abcs Of Marketing
We've all heard that the essence of marketing is to find a need and fill it. Well, unless you have deep pockets or know exactly what the world needs, your marketing efforts will yield a better response if you follow this formula instead: Find a want and fill it. Most of us have enough food, shelter, clothing, and transportation-we don't need much more. But we want more. We need food, but we want fast foods, diet foods, or gourmet foods. Most of us don't need a 21/2-bath home or expensive designer clothes, but we want them. We may need a car, but we want a Lexus or a BMW. 'What's In It For Me? I was feeling confident the day I mailed 1,700 sales letters to a list of prime prospects, sure that this promotion would have my phone ringing off the hook. But two weeks later, only one call had come in. So I asked an expert, Lanny Aiken, to take a look at my letter. I had made a classic mistake: I had created a selfish monologue rather than a problem-solving dialogue. By focusing the content of my letter on selling what my service is and not what it could do for the agencies, I neglected to address all prospects' primary concern: 'What's in it for me?' You see, people don't buy things; they buy the results that things offer, such as happiness, wealth, popularity, wisdom, comfort, recognition, or safety. Clients buy my marketing and training services for one reason: to make more money. By generating more revenue, they can fulfill their desire to create a better lifestyle for themselves and their families. Make the Most of Your Marketing Efforts Do you know why people buy from you? To get the most from your marketing efforts, you must first uncover what a prospect wants-the bottom-line reason-and then tailor your pitch to communicate specifically how your service or product can fulfill those desires. In my marketing workshops, I frequently tell this story to demonstrate to attendees how they can talk their way right out of a sale: A jeweler walks into a computer store and is confronted by a salesman who immediately launches into a rapid-fire monologue about the technological wizardry of a particular personal computer. The salesman is on a roll as he watches his prey listen patiently. About 20 minutes into his pitch, the jeweler timidly asks, 'But can I use this computer to create letters and fliers?' That's all he wants to do, but the salesman had failed to uncover and address the real payoff the jeweler was seeking. He overwhelmed the customer with too much information and ultimately sabotaged the sale. Create the payoff picture in prospects' minds. People don't buy for rational reasons, but for emotional rewards. Your goal is to tap into their subconscious desires. Your materials should help prospects envision enjoying the rewards that you will bring to their lives. In many cases, your message will have little to do with what you're actually selling. Take a look at how McDonald's markets its products, for example. The company doesn't sell the quality of its burgers. It sells fun, excitement, and shared love. Mercedes sells status. Clairol, youthfulness. Hallmark sells quality and love with its slogan 'When you care enough to send the very best.' If you're marketing insurance to professionals, don't overload the client with your technical knowledge. Develop a message that will help prospects see themselves receiving the peace of mind that comes with solid insurance protection and the time you'll save them with your professional customer service and claims service. If you're a financial planner, don't just tell people how much money you'll earn for them. Show them how they can buy something they've always wanted with the extra savings-perhaps a vacation home, a college education for their child, or a comfortable retirement. What's your promotable edge? In marketing, perception is reality. The prospect who is emotionally stimulated will use logic to rationalize the purchase. This is the stage at which you must then prove the superiority of what you're selling. Provide prospects with testimonials, money-back guarantees, and articles by and about you. By communicating your product's or service's unique advantage, you'll motivate prospects to buy sooner rather than later.