Hard Market E&S Lesson: Make A Clean Submission

The main problem is the submission of incomplete applications, said Roay Azari, senior underwriter and team leader at Delta General Agency Corp. in Houston.

"Its amazing that a simple application can be so difficult," added Bill Fink, president of Delta.

"Despite the hard market, some agents never caught on to the fact that my [carrier] is going to pick the best looking, cleanest application to look at," noted Stacey W. Shurson, president of IIW Insurance Services of California, in Dublin, Calif.

The range of problems, the executives say, run from handwritten applications that are simply illegible to incomplete information. Missing information can include details as basic as the address of the insured and a description of the risk.

"The agent knows all the information and what the loss run of the insured is, and they dont provide it," explained Ms. Norton. "A lot of companies begin working on applications in the date order they receive them. If there is anything missing on the application, it gets put to the bottom of the pile or is never worked on. Some just throw it in the garbage."

"We work on applications that are easy and legible," she continued. Retail producers "have been told over and over again. Theyve heard seminars and there have been plenty of articles on the subject. That is the number one thing agents should look to do when submitting an application, and some of them still dont get it. That is the most glaring problem."

Ms. Shurson related a couple of stories that illustrate the point

In one case, an agent submitted an application for a company that makes tank stands. The application did not say what kind of stands they were, oil tanks or something for a barbecue. There was nothing on the application about the applicants loss history, the length of time it had been in business, or other pertinent information.

In another case, an agent said his client was looking to construct a basketball court in a warehouse for basketball leagues. She told the agent that it was something her firm could work on. When the application came into IIW, the only information on the application about the risk was "warehouse-basketball," and it said nothing about renovation, use or size of the court.

In some ways, the wholesalers blame themselves for todays problems that they allowed to manifest during the soft market.

"We use to do a lot of hand holding," said Ms. Shurson, explaining that during the soft market they could sit down with an agent and go over the application, filling it out with them.

"I remember when agents use to come in and sit in front of me and I would type up the application. Those days are gone forever," said Ms. Norton. "But we should have never allowed it to happen. We created our own monster during the soft market by doing more for agents."

However, executives say there are other reasons why agents are not submitting quality applications besides having picked up bad habits over the years of the soft market. They, like the companies and wholesalers themselves, are just swamped with business and in a rush to get the submission in. They also dont have the qualified help to get the job done.

Ms. Norton said agencies are desperately looking for experienced people. Many of the young people who, if they had gone into insurance instead of technology during the dot-com boom, would today be the experienced veterans the agencies need. Instead, the experience is lacking. Despite the job crunch, an experienced agency assistant can get a job within four or five days once they start looking, she added.

"They need experienced people immediately," she explained. "They dont have time to train."

But, Ms. Shurson said that the younger people could be a bright spot for the industry. Women and minorities who have come to work in the insurance industry, she observed, understand the need for complete, legible submissions to wholesalers. Maybe they are hungrier than some of their older, more comfortable and secure counterparts, she speculated, but those producers and service representatives who understand the need for neat and complete applications "have made a killing" in the hard market, she added.

"The hard market has been a good education and financially beneficial to them," observed Ms. Shurson. "They have not been afraid of the hard market."

Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 30, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.