RISK MANAGEMENT
Personal Lines Manager. This employee’s job description
did not entail discussing or recommending coverage with
clients, and the agency believed that her job description
was in line with the requirements of the state department
of insurance. However, the department viewed it differently
and fined the agency $7,000 for the employee not having
the proper license and viewed the tasks performed by this
employee as “effectuating the sale of coverage.” As soon
as the agency was notified of the infraction, they made
changes to her job description and directed her to acquire
the proper license. They then established a Director of
Compliance and Compliance Committee to monitor the
activities on an ongoing basis.
Standard operating procedures will enhance the
efficiency and management of multiple agency locations.
Staff can transfer among agencies, without extensive
readjustment. The essential procedures should not vary.
Each agency should have similar procedures regarding
date-identification of communication with clients and
carriers. Additionally, documentation of coverage offered
and rejected, and maintenance of expiration lists should
be standardized.
This excerpt from a letter we received from the attorney
retained to defend an insured, reveals the difficulties in
offering a defense when procedures are not followed. The
litigation arose from damage sustained by a commercial
enterprise. The carrier argued that the agency had not
provided the necessary information for the carrier to quote
coverage, despite several requests. Counsel stated the
agency “has no documentation that it sent the proper
information, and the agent who worked on the account
left the agency several years ago on unfavorable terms.
The agent’s CSR says the agent was not detail-oriented,
was not good about providing information, and often made
mistakes.” Defense counsel opined that it was highly
likely the judge will rule that the agency failed to provide
the necessary information. The agency itself had a strong
culture of compliance but suffered from one agent who had
not followed the standard office procedures established
and who, thus, created a significant problem for the
agency.
In addition to implementing uniform procedures around
the process of file documentation, the agency should also
implement uniform procedures for diary and suspense
systems.
There should be a centralized agency management
system, and computers in each location should be
compatible with one another.
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