Long ago, when I was a newbie to the insurance industry, I was told that the definition of an expert was simply someone who knew more than the person he was talking to. Unfortunately, in our current litigious society, this definition is not satisfactory and it probably never was. Today, insurance professionals who hold themselves out as experts in one or more areas of insurance are held to a much higher standard.
Virtually all insurance organizations want their members to be viewed as professionals who offer expert advice and counsel to their clients and prospective clients. Specialization is one of the best ways to differentiate your insurance team. Specializing in one or more areas of our complex insurance market, such as marine insurance, workers’ compensation, international trade or life and health insurance takes extra effort and education, but the effort is well worth it.
This case settled just days before it was due to go to trial and resulted in a very favorable settlement for the insured. I really wish it had gone to trial because it might have provided a guidepost as to what was expected of an expert insurance professional.
This litigation revolved around the question of whether an insurance agent or agency that holds itself out to be a professional with special expertise insurance places a special burden on the producer to advise and counsel the client. Keep in mind that the duty to advise and counsel is somewhat murky and varies substantially from state to state. In my judgment, the greater the expertise, the greater the right of the insurance client to rely on the chosen insurance professional.
One thing is crystal clear: In the context of the definition of providing sufficient information, this is not accomplished by asking a client or prospective client to fill out an application and then providing them with a quotation. When an agent with special expertise makes an offer, that agent must give an accurate and complete explanation of the coverage offered.
Another interesting issue arose in this litigation involving the general practices of the agent in explaining to the client the terms and conditions of an insurance contract. In this matter it was the agent’s normal practice to provide a thorough explanation of the terms and conditions of the yacht policy in general and in particular the effect of a lay-up warranty. The producer may be held responsible if it is determined that no explanation was given. Unlike New Year’s resolutions, this resolution must be honored by yourself and your associates.