Carrier Directives to
Deny Claims
Recently we were made aware that insurance carriers are directing their
agencies to deny certain claims related to the COVID-19/coronavirus; most
specifically business income claims. Reports are some carriers have even put
this directive in writing. Big I's risk management department strongly
advises that agencies NOT make a coverage determination on behalf of any
insurance carrier or deny any claims for several key reasons:
· The agency is not a party to the insurance contract. The insurance policy
is between the named insured and the insurance carrier. Only the carrier has
the right to deny coverage.
· We are not aware of any agency contract that allows the insurance carrier
to place claim investigation and ultimately the duty to deny a claim on the
agent.
· There is a state licensure issue. Loss determination and claim denials can
only be made by licensed adjusters. No single person can hold both and agents
and an adjusters license. Don't operate outside your licensure.
· Unfair claims practices statutes require that claim denials be in writing
specifying the reasons for the denial specific to THAT insured's situation
and THAT insured's policy language. A blanket denial which does not consider
the individual insured's situation and applicable policy language violates
statute.
· Claims management is the carrier's responsibility, not the agents.
For these reasons, the agency should not issue a claim denial to any insured
on behalf of the carrier.
However, if the carrier desires to create a blanket denial letter, agencies
should share that letter with the insured, clarifying it comes from the
carrier, but the agent should still submit the claim to the carrier if the
insured reports a claim to the agency. Do NOT "talk the insured out
of" filing a claim. Explain to the carrier that you shared its letter,
but that as a licensed agent, you are not licensed to deny a claim. Further,
refer the carrier to your state's Unfair Claims Practices regulation.
We recognize that these are unprecedented times. None of us has ever seen a
situation such as exists now. Regardless, don't undertake duties that do not
belong to the agency. Don't create an errors and omissions or regulatory
issue for you or your agency. Stay within your licensure.
Know that we are here to answer any questions we can and help any way we can.
DON'T ADVISE YOUR
CUSTOMERS IF CORONAVIRUS related claims are COVERED OR NOT!
Let the insurance carriers do that. Please see sample letter for your use.
This article is intended to
be used for general informational purposes only and is not to be relied upon
or used for any particular purpose. Swiss Re shall not be held responsible in
any way for, and specifically disclaims any liability arising out of or in
any way connected to, reliance on or use of any of the information contained
or referenced in this article. The information contained or referenced in
this article is not intended to constitute and should not be considered
legal, accounting or professional advice, nor shall it serve as a substitute
for the recipient obtaining such advice. The views expressed in this article
do not necessarily represent the views of the Swiss Re Group ("Swiss
Re") and/or its subsidiaries and/or management and/or shareholders.
Copyright 2020 Swiss Re
Big "I"
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