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Are You Holding Your Customers Accountable?

Posted By Administration, Tuesday, August 15, 2017

by Curt Pearsall, CPCU, AIAF, CPIA, President, Pearsall Associates, Inc. and Special Consultant to the Utica National E&O Program


Is a lack of customer accountability an issue in your agency? Do you ask yourself “Why is it always our fault when a customer has a loss that is not covered? They knew that they didn’t have that coverage.”

This is one of the bigger frustrations among insurance agencies, making it an appropriate errors-and-omissions (E&O) objective to focus on.

An agency would be hard-pressed to hold customers accountable without a well-documented file. When an E&O claim happens, the E&O carrier will look to secure the actual file in question, whether it’s paper or electronic, to review what is in it. This file will also be available to the plaintiff’s attorney. Solid documentation will make the E&O carrier’s job much easier. This assumes that the documentation is prompt, accurate, and professional. A file with sketchy documentation could prove to be a challenge in an E&O matter.


Document and memorialize in writing

Twenty-five years ago, when a client would call with a question or a decision on a coverage, the agency standard was to document that discussion in the agency file. Nothing more, nothing less. Today, that is not enough. While these discussions should be documented in the system, they should also be memorialized back to the client in

a written format — by email, letter, etc. Without some form of documentation that confirms or memorializes the discussion to the customer, it will be the agency’s word versus the client’s word if an uninsured loss has occurred. You might be surprised about what a client will say in such instances.

The goal is to address any potential misunderstandings between what the customer told you or thought they told   you and what you heard. Simply documenting the conversation in the agency management system does not help to identify a misunderstanding.


Documentation to the customer should occur in a variety of circumstances. Here are some examples:

  The client was given a proposal, but does not say “yes” to all the coverages proposed. There should be clear documentation on which coverages were purchased and which were not. Wording can be as simple as “at this time, the following coverages have not been bound…” followed by the list.

  The client asks about how coverage would apply, such as “Mom and Dad are now in a nursing home and the house is vacant. What do I need to know?” The answers to such questions must be accurate and documented.

  The client has signed the completed application. The best type of documentation involves something with the insured’s signature on it. Holding a customer accountable is enhanced when an agency can get their signature on a document. In virtually all legal jurisdictions, a customer will be held responsible for the accuracy of the information in an application if they signed it. Be sure to have the client review the application before asking them to sign it.

  The agency provides a quality proposal to the client. This should include 1) a variety of limit options, 2) definitions of key insurance terms, 3) specimen policies to allow your client to read the actual forms that will be part of their insurance coverage, and 4) a list of other coverages for the client to consider. Since it is not possible to list all coverages, the disclaimer should state “coverages include, but are not limited to, the following…”

  Interaction with customers involving key information.

An added benefit

Make “enhancing customer accountability” one of your agency’s goals. In addition to better protecting your agency from E&O claims, you may find your agency writing more business as well.

Tags:  Are You Holding Your Customers Accountable?  Insurance Content  Insurance Industry  Insurance News  Weekly Industry News 

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