Advocating on behalf of customers and attempting to
negotiate with carriers after the denial of a claim is something that most
agents look at as part of the value proposition they bring to their
customers. It is also considered by
E&O defense attorneys as one of the most dangerous things agents can do
when it comes to E&O claims. Earlier
this year, the Big “I” Professional Liability Program and Swiss Re Corporate
Solutions held a free risk management webinar for members on the topic of “Avoiding
E&O Exposure When Advocating for Customer Claims.” Feel free to review the webinar and below are
a few of the key take-aways:
Discuss with staff your agency’s procedure on
advocating for customer claims after a denial.
If you don’t have procedures, develop them. The procedure should contemplate who can
advocate, the natural of how to properly do so, and when in the process it is
Understand the potential ramifications of advocating
for customer claims, including knowing the difference between “advocating” and
“falling on your sword”. This becomes
even more important with the trend of more E&O claims involving carriers
coming back against agents. Situations
when to advocate include correcting the carrier’s misunderstanding of the
facts, when the carrier seems to be misinterpreting policy language, and
seeking clarification or further explanation.
Keep in mind that anything you put in writing can be damning testimony
should it escalate to an E&O claim later on. Your written coverage interpretation
discussions could even be used to highlight a lack of understanding, fueling an
E&O claim alleging misrepresentation.
Finally, “falling on your sword” is highlighted by taking the blame for
the claim denial with the customer, asserting that it was the agency’s action
or inaction that caused the lack of coverage, and suggesting the carrier or
E&O carrier will pay the claim.
Never ever do this, especially in any written form.
Don’t hesitate to involve and receive the
guidance of your E&O carrier in situations where a carrier has denied a
claim. Providing documents, admitting
liability, participating in settlement discussions, incurring costs or
expenses, and giving recorded statements without your E&O carrier could
violate the “Reporting and Notice” provisions of your E&O policy,
Appropriate advocating will include guiding the
customer through the claims process, including ensuring they comply with notice
provisions and other prerequisites of coverage.
Facilitating the exchange of information with the carrier when an
insured needs to make a claim is also an action that agents can take.
David Hulcher is AVP
of Agency E&O Professional Liability Risk Management for the Big “I”
Professional Liability Program. Visit the
E&O Happens website
for valuable agency E&O risk management information and tools.