Happy New Year! It's time, once again, to take a clean slate and resolve to write upon it a new chapter of insurance achievement!
In the January issue, I usually suggest resolutions I believe will prove valuable to insurance folks. But what good is the past if we fail to learn from it? Thus I resolve to act on one of the clear lessons I've gleaned from my past efforts: that advocating implementation of more than one resolution at a time leads not to mere failure, but to abject failure! None of my inarguably valuable suggestions has taken the industry by storm--or even caused a slight atmospheric disturbance.
This year I'm adopting a new strategy: one resolution per year. This will allow you to bring all your time and resources to bear on one initiative. If all goes as planned, next year we can all move on to a second resolution, then the following year to a third, and so on to an ever brighter future!
So after much analysis, here is my nomination for Resolution 2008: Learn from claims!
Many of you may have met CE requirements by attending coverage/claims classes in which policy provisions are detailed, reviewed and beaten into the ground. Many have also met their professional liability requirements by attending E&O seminars at required intervals. Some have even chosen to participate in sales, management and customer service seminars, despite the refusal of state authorities to consider such offerings worthy of CE credits. Yet one inescapable conclusion arises from my participation and observations in all the above: All the lessons learned must be blended to form an agency approach that pushes all the buttons at once.
Think about it. You fail to sell the proper coverage (sales), then the insured has a claim (coverage and claims). The insured isn't happy with the outcome of the claim (coverage). The insured is totally ticked off and blames you for failing to provide the coverage he clearly wanted and thought he had (sales, customer service). The insured, unhappy with your answers and feeling mistreated, contacts an attorney (customer service, E&O). The attorney alleges you are incompetent (sales, management and customer service) and tries to prove this by dredging up similar errors from your past (management and E&O). The attorney asserts you failed to learn from past errors, which proves you are either incompetent (management, coverage) or a scoundrel (management, ethics).
Could that lawyer be painfully close to the truth? Have you failed to learn not just from your errors, but those of others? Blessed is the man who survives to change his ways after a heart attack, but wiser is the man who learns that lesson from the heart attack of another. Substitute "claim" for "heart attack" and you have the objective of my 2008 resolution in a nutshell.
Let's walk through an actual claim to illustrate the power that practicing Resolution 2008 can unleash.
A restaurant customer claims injury from biting down on a bone in his salad. He assumes the restaurant will pay his $285 dental bill. The restaurant owner, in turn, assumes such an obvious claim will be covered under his liability policy. The agency, having seen similar claims paid numerous times, assures the insured that his liability is a non-issue. That's because his policy includes a "no-fault" coverage known as medical payments, designed specifically to handle such situations. The agency remits the claim to the carrier under med pay, but the adjuster turns it down flat. The agency is shocked and the insured is angry.
OK, what just happened and how can we apply Resolution 2008 to this scenario?
First, look to coverage. Is the adjuster correct to deny the claim under med pay? Check the ISO CG 00 01, look at the medical payments provisions and note the exclusions. The only one that matters here is "f." It excludes coverage for injuries "included within the 'products-completed operations hazard.'" So is a bone in a salad consumed on the premises of a restaurant considered a "products-completed operations" claim? Look at the definition of that hazard in the CGL and the answer is "no," since the definition basically says the hazard applies only when the incident takes place away from the insured's premises and for items out of the insured's care and control.
But for all restaurant classifications, the ISO manual requires the attachment of an endorsement, CG 24 07, that amends the CGL as follows:
"'Products-completed operations hazard': a. Includes all 'bodily injury' and 'property damage' that arises out of 'your products' if the 'bodily injury' or 'property damage' occurs after you have relinquished possession of those products."
So the adjuster had it right. Since the salad claim--thanks to the CG 24 07--is now considered to fall under the "products-completed operations hazard," then exclusion "f" of medical payments applies and--voil?, no med pay coverage. The only way for the carrier to pay this seemingly minor claim under the CGL is to make it a liability settlement. But that creates a potential problem arising from a major issue med pay was meant to avoid: an admission of negligence. A liability payment, unlike med pay, is legally based on an assumption of negligence on the part of the insured. In making such a payment, the carrier concedes the insured's negligence. If the consumer later decides that more medical complications have arisen from the "bone" incident, the carrier may be unable to deny the restaurant was negligent and thus responsible for them.
Too many agents would draw no further conclusions (i.e., lessons) from our claims scenario, dismissing it as a fluke, trivia or just mildly interesting. "Besides," they reason, "for $285, nobody's going to get too bent out of shape." If that's the extent of their summation, they've learned nothing and have left themselves open to a similar incident in which the damages sought could be much higher and not quite so easily forgiven by their insureds. And then here comes the E&O.
So what happens with a simple application of Resolution 2008?
First, if you'd heard of such a claim and were surprised at learning the adjuster was correct, that surprise would have set off alarms. You'd ask yourself if you have any restaurants on your books (sales). You'd decide that a quick review of their med pay coverages is in order (coverage). You'd identify gaps and possible solutions, such as policy endorsements, alternative coverage forms or carrier specialty programs (coverage, E&O). You'd present those solutions to affected clients as soon as possible to preclude future claim surprises (sales, customer service, E&O). You'd apprise clients that this is the way professional agents add value (sales, ethics), that you are always on the lookout for new developments that may affect their coverage programs (management, coverage, customer service) and will offer them the choice of accepting your recommended improvements or declining them in writing (sales, service, ethics, E&O). You'd build any such coverage improvements into all future recommendations to prospects (sales), knowing that most of your competition didn't take the time or effort to note the issue or seek corrective possibilities (sales, management, customer service, ethics, E&O).
Talk about pushing all the buttons!
So in this election year, friends, vote for Resolution 2008! One small resolution for you, one giant leap for agency-kind!
Chris Amrhein is an insurance educator and speaker with more than 30 years in the industry. He is also chief fun officer of www.insuranceisfun.com, where his newest book of insurance musings, "Yes, Virginia, There Is Insurance," is now available. Readers may contact Chris at chris@insuranceisfun.com.
In the January issue, I usually suggest resolutions I believe will prove valuable to insurance folks. But what good is the past if we fail to learn from it? Thus I resolve to act on one of the clear lessons I've gleaned from my past efforts: that advocating implementation of more than one resolution at a time leads not to mere failure, but to abject failure! None of my inarguably valuable suggestions has taken the industry by storm--or even caused a slight atmospheric disturbance.
This year I'm adopting a new strategy: one resolution per year. This will allow you to bring all your time and resources to bear on one initiative. If all goes as planned, next year we can all move on to a second resolution, then the following year to a third, and so on to an ever brighter future!
So after much analysis, here is my nomination for Resolution 2008: Learn from claims!
Many of you may have met CE requirements by attending coverage/claims classes in which policy provisions are detailed, reviewed and beaten into the ground. Many have also met their professional liability requirements by attending E&O seminars at required intervals. Some have even chosen to participate in sales, management and customer service seminars, despite the refusal of state authorities to consider such offerings worthy of CE credits. Yet one inescapable conclusion arises from my participation and observations in all the above: All the lessons learned must be blended to form an agency approach that pushes all the buttons at once.
Think about it. You fail to sell the proper coverage (sales), then the insured has a claim (coverage and claims). The insured isn't happy with the outcome of the claim (coverage). The insured is totally ticked off and blames you for failing to provide the coverage he clearly wanted and thought he had (sales, customer service). The insured, unhappy with your answers and feeling mistreated, contacts an attorney (customer service, E&O). The attorney alleges you are incompetent (sales, management and customer service) and tries to prove this by dredging up similar errors from your past (management and E&O). The attorney asserts you failed to learn from past errors, which proves you are either incompetent (management, coverage) or a scoundrel (management, ethics).
Could that lawyer be painfully close to the truth? Have you failed to learn not just from your errors, but those of others? Blessed is the man who survives to change his ways after a heart attack, but wiser is the man who learns that lesson from the heart attack of another. Substitute "claim" for "heart attack" and you have the objective of my 2008 resolution in a nutshell.
Let's walk through an actual claim to illustrate the power that practicing Resolution 2008 can unleash.
A restaurant customer claims injury from biting down on a bone in his salad. He assumes the restaurant will pay his $285 dental bill. The restaurant owner, in turn, assumes such an obvious claim will be covered under his liability policy. The agency, having seen similar claims paid numerous times, assures the insured that his liability is a non-issue. That's because his policy includes a "no-fault" coverage known as medical payments, designed specifically to handle such situations. The agency remits the claim to the carrier under med pay, but the adjuster turns it down flat. The agency is shocked and the insured is angry.
OK, what just happened and how can we apply Resolution 2008 to this scenario?
First, look to coverage. Is the adjuster correct to deny the claim under med pay? Check the ISO CG 00 01, look at the medical payments provisions and note the exclusions. The only one that matters here is "f." It excludes coverage for injuries "included within the 'products-completed operations hazard.'" So is a bone in a salad consumed on the premises of a restaurant considered a "products-completed operations" claim? Look at the definition of that hazard in the CGL and the answer is "no," since the definition basically says the hazard applies only when the incident takes place away from the insured's premises and for items out of the insured's care and control.
But for all restaurant classifications, the ISO manual requires the attachment of an endorsement, CG 24 07, that amends the CGL as follows:
"'Products-completed operations hazard': a. Includes all 'bodily injury' and 'property damage' that arises out of 'your products' if the 'bodily injury' or 'property damage' occurs after you have relinquished possession of those products."
So the adjuster had it right. Since the salad claim--thanks to the CG 24 07--is now considered to fall under the "products-completed operations hazard," then exclusion "f" of medical payments applies and--voil?, no med pay coverage. The only way for the carrier to pay this seemingly minor claim under the CGL is to make it a liability settlement. But that creates a potential problem arising from a major issue med pay was meant to avoid: an admission of negligence. A liability payment, unlike med pay, is legally based on an assumption of negligence on the part of the insured. In making such a payment, the carrier concedes the insured's negligence. If the consumer later decides that more medical complications have arisen from the "bone" incident, the carrier may be unable to deny the restaurant was negligent and thus responsible for them.
Too many agents would draw no further conclusions (i.e., lessons) from our claims scenario, dismissing it as a fluke, trivia or just mildly interesting. "Besides," they reason, "for $285, nobody's going to get too bent out of shape." If that's the extent of their summation, they've learned nothing and have left themselves open to a similar incident in which the damages sought could be much higher and not quite so easily forgiven by their insureds. And then here comes the E&O.
So what happens with a simple application of Resolution 2008?
First, if you'd heard of such a claim and were surprised at learning the adjuster was correct, that surprise would have set off alarms. You'd ask yourself if you have any restaurants on your books (sales). You'd decide that a quick review of their med pay coverages is in order (coverage). You'd identify gaps and possible solutions, such as policy endorsements, alternative coverage forms or carrier specialty programs (coverage, E&O). You'd present those solutions to affected clients as soon as possible to preclude future claim surprises (sales, customer service, E&O). You'd apprise clients that this is the way professional agents add value (sales, ethics), that you are always on the lookout for new developments that may affect their coverage programs (management, coverage, customer service) and will offer them the choice of accepting your recommended improvements or declining them in writing (sales, service, ethics, E&O). You'd build any such coverage improvements into all future recommendations to prospects (sales), knowing that most of your competition didn't take the time or effort to note the issue or seek corrective possibilities (sales, management, customer service, ethics, E&O).
Talk about pushing all the buttons!
So in this election year, friends, vote for Resolution 2008! One small resolution for you, one giant leap for agency-kind!
Chris Amrhein is an insurance educator and speaker with more than 30 years in the industry. He is also chief fun officer of www.insuranceisfun.com, where his newest book of insurance musings, "Yes, Virginia, There Is Insurance," is now available. Readers may contact Chris at chris@insuranceisfun.com.
