Just say no
Barry Zalma wrote a fantastic article, "Saying no" (AA&B February 2011). We constantly fight the added paperwork or entries into agency software. Interestingly enough, how many times do we even get from carrier training commands including "skip here" and "just go to" that make it worse? I would love to see this article be a must-read for everyone in our industry.
Grosse Pointe Woods, Mich.
I enjoyed Chris Amrhein's March 2011 article ("Don't get even, get ethical") very much. Sometimes a little perspective is something everyone can use.
I taught an insurance class at Washington University last year and I started off by giving everyone in the class a $1 bill. I told them they had just formed an insurance company and were now responsible for anything that happened to me or any damage I caused during the semester and asked if they had any questions. I also pointed out that my insurance premiums were too high and I thought they should lower their rates. There were no questions forthcoming so I prodded a bit and asked if they wanted to limit the liability they would pay. Did they want to exclude earthquake on my house? Then I asked if they cared how much it would cost to replace my house, because they were responsible. Naturally, everyone understood they weren't actually on the hook to pay anything, but it did put things in a little different perspective for them. I think I enjoyed the sessions as much as they did.
CPCU, CIC, St. Louis
Much of my work comes from the disillusionment of the general insurance buying public. While that statement is a little overblown, there is a lot of truth to the idea that insurance buyers really want someone on their side of the table to counter the antics of the insurance providers on the other side of the table.
The tricksters will always be out there; that means there will always be work for you and me and some of the other folks we know. Keep up the good work.
Scott M. LeMay
CRM, ARM, Germantown, Tenn.
I'm part of the three-specialist social media within public affairs at State Farm Corporate. I read Rick Morgan and Charles Wasilewski's article "Swim through the social Web" (AA&B April 2011) and want to thank you for capturing the essence of why it's important to take a deliberate look at social media response staffing and strategy. The piece provides context around the importance and consequences the medium affords.
I was quite interested in Barry Zalma's "Cancellation to litigation" (AA&B May 2011) suggesting a series of steps to take when a policy is being cancelled for nonpayment. I know some of my students will say they were trained not to follow up on late payment situations. Some E&O instructors advise agents not to follow up. They believe it creates a "special relationship" that could bite them in court. Fail to follow up just once and the insured will say, "My agent always calls when the policy is going to cancel. This time I didn't hear from him therefore I thought I was OK."
I don't advise my students to do one thing or the other. It's their business decision. I do recommend that they be consistent. Whatever you decide your policy is going to be, stick with it and put procedures in place to make sure it gets followed. Additional thoughts would be appreciated.
E&O carriers have stated for years that calling the insureds for nonpayment exposes us to a greater liability than leaving the notifications to the company. If you make it a practice to call late payers and you miss one, you become the responsible party. We used to call and it helped our retention numbers, but the notifications from the companies did not always arrive prior to cancellation. We now call to verify that bills went to the correct address but have refrained from doing anything else.
Paso Robles, Calif.
I question Barry Zalma's advice about calling the client when a premium is not paid. Many E&O cases result from clients relying on an agent calling to remind them to pay their direct bill policy. If the agent fails to call to remind them to pay one month, the agent is sued based upon the pattern they have set in the past. It is highly impractical to call every time you get a late notice. Many clients wait until the last day to pay. I agree that we are in the service business, but repeated calls to late payers are a bad precedent to set.
CPCU, CLU, Chicago
I'm not sure if contacting the insured for not paying the premium is only in the case of an address problem, or do you mean contacting every insured on every late payment? If you mean contacting every insured on every late payment, that's not what the E&O carriers have been telling us. The company cancellation notice should be the final legal notice for non-payment of premium unless there is an address issue.
Crown Point, Ind.
Zalma response: Interesting points. Fear of litigation can create the problem trying to be avoided. Agents and brokers, just like lawyers, are in a service business. They are also in business to make money.
If an insured's policy is canceled because he or she failed to pay a premium in a timely manner, the agent or broker loses the commission he or she would have earned if reminded. Second, a cancellation for nonpayment of premium can make it difficult for an insured to obtain replacement insurance.
People forget. If an agent or broker is advised of a pending cancellation before it takes effect, the agent fails in an obligation to provide the service he was hired to provide. If he or she fails to write or call to advise the client of the problems that he will have if the premium is not paid and it could be cured the insured can avoid the stigma of a cancellation for nonpayment. If the policyholder wants to go to another insurer, the policyholder should cancel directly to avoid the stigma of a cancellation for no payment. This is not raising a special fiduciary relationship but just a follow-up to keep the client's insurance current.
I do agree that the agent or broker should be consistent—either do it or don't for all clients. I see a better chance of being sued if there is no reminder than if there is one.
Overdue bills would put too much pressure on most agents, but when an agent receives notice of cancellation from an insurer, I as a customer who simply forgot would want to receive a call from the agent. Some insureds also think there is no problem letting a policy expire and be canceled by the insurer for nonpayment. They need to be told that doing so puts a stigma on them for having a policy canceled for nonpayment when they could cancel it themselves at expiration with no stigma.
Kindness goes far
Lisa Harrington's article "Kindness as leadership" (AA&B May 2011) was outstanding!
Santa Fe, N.M.
What a wonderful article on leadership!! I believe in the KIND acronym and use it in my work life. Just thought I'd drop a note to let you know how much I enjoyed it.