Policyholder Education: Agent or Carrier Responsibility?

February 7, 2013
business training

  • February 7, 2013 at 1:15 pm
    Barry Rabkin says:
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    I think, without regard for E&O or specific legal requirements, it is a shared responsibility of insurers, insurance agents, and insurance regulators along with insurance trade associations to “educate” customers about what is and what is not covered. Maybe that means a quick 1-pager when possible; maybe it means a web site which customers are directed to find more about what is covered and is not covered, maybe it means something else. But pointing fingers is not the solution.

    • February 7, 2013 at 3:44 pm
      Agent says:
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      Yes Barry, but the problem is that many carriers use different forms. There is a difference between a State Farm policy and one written by Travlers. I don’t think a one pager is the answer because of lack of uniformity between the carriers.

      • February 10, 2013 at 7:44 pm
        Bob Trotta says:
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        MAYBE that’s the PROBLEM right there! WHY can’t policies be UNIFORM with the SAME language?

        • February 11, 2013 at 10:41 am
          caffiend says:
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          ISO tries, the regulators try, and the agents encourage it.

          Getting the companies to all switch to a uniform policy form would be about as likely as getting tech companies to agree on a single mini-USB plug shape.

          • February 11, 2013 at 11:49 am
            Bob Trotta says:
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            Maybe it’s time the GOVERNMENT steps in and MAKES them use UNIFORM language! It’s ridiculous! I see NO reason WHY the language cannot be the same no matter what the company! It’s just like the automobile LEMON LAWS! They are ALL different from state to state! They should ALL be the same! It doesn’t cost the state anything! Consumers get screwed every which way they turn with all this mumbo-jumbo!

            The insurance companies ALWAYS make money no matter how much they cry when there is a disaster! I cannot recall ANY insurance company, in recent history, filing for BANKRUPTCY!

          • February 11, 2013 at 3:55 pm
            caffiend says:
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            Not going to argue with you Bob since it’s pretty evident that you’re unfamiliar with how insurance is regulated on a state to state basis.

            However your comment on bankrupt insurance companies does require a reply. Here’s a link to a list of companies that went bankrupt that wrote in the CA workmen’s comp market
            https://wcirbonline.org/WCIRB/answer_center/insolvent_insurer_list.html
            and here’s a link to a list of FL companies:
            http://www.myfloridacfo.com/Division/Receiver/Companies/default.htm

          • February 12, 2013 at 2:05 pm
            jw says:
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            Bob, why don’t you contact your state lawmakers, that’s who decides how to regulate insurance. Those of us reading IJ, well we don’t make the rules.

        • February 11, 2013 at 4:19 pm
          Agent says:
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          If all policies were exactly the same, what would differentiate them from one another other than the cost? Carriers like to offer better coverage than their competitors. They all seem to have a hook that is attractive. Most of our HO companies have an extension endorsement offering several additional coverages. A small charge is added in, but they are generally pretty good additional coverage for the consumer. This is why they are not all uniform.

  • February 7, 2013 at 1:30 pm
    Kevin Ring says:
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    Insurance policies in general are written terribly and are not decipherable by the average person who is purchasing the policy.

    The insurance companies should fix that problem, but ultimately if your agent is not explaining to you what you are buying and what is left uncovered, they are not doing their job ethically.

    Agents like to hide behind E&O buzzwords, but the insurance buyer has a right to know (in detail) what they are purchasing and the agent has a responsibility to provide that information.

    If agents aren’t responsible for educating clients and potential clients about their insurance needs and explaining to them what they’ve purchased, then what is the role of the agent? If it is nothing more than a distribution channel, we can use the internet for that.

  • February 7, 2013 at 1:40 pm
    Gnashgal says:
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    In some states it’s the insured’s responsibility–I believe Kentucky is one of them, but lawsuits will always override the law. In my entire career, I only had one client ever sit down with me and went through the policy page by page because he wanted to understand. After that meeting, every year he would read through his policy, check it against the year before and asked questions.

  • February 7, 2013 at 1:55 pm
    insurance102 says:
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    I believe this is a partnership between the agent, insured and carrier.

    The carrier advises the agent on coverage, risk management and loss prevention. In turn, this adds value to the insured.

    The client knows that they are having value created for them and are not simply paying premiums to a carrier when they have little or no losses.

    The risk management and alternative risk financing are particularly important on national accounts.

  • February 7, 2013 at 2:45 pm
    Cheetoh Mulligan says:
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    I beleive it depends on the line of business. Many agents, through their own fault, don’t even have contact with many of their clients on direct bill. The renewals happen and the carrier sends the bill and the dec page renewal.
    Clients don’t take the time to read the flood brochures as some are long.

  • February 7, 2013 at 2:52 pm
    Agent says:
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    In this dysfunctional and distracted world we are living in, the average consumer really doesn’t want to know every detail of their coverage and depends on their agent to explain changes in coverage, deductibles etc. I always send a letter out to my Commercial customers detailing any changes of coverage or premium. Personal Lines is more automated, but if we have moved the account from one market to another and the forms, deductibles or other coverage changed, the customer is sent a letter. At least we have something in writing because the phone call is forgotten very quickly with most people.

  • February 7, 2013 at 4:32 pm
    Paul says:
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    People in this day and age want to be spoon fed. They don’t want to take the time to sit down and read the policy. Most insureds attitude is “Nothing will happen to me, I won’t be affected by a fire, tornado, hurricane or flood, so why should I worry. My agent will take care of everything.” The insureds must take the time to read the policy and ask questions and the agents and carriers must be available to answer any questions that might arise.

    • February 10, 2013 at 7:50 pm
      Bob Trotta says:
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      Maybe it’s time that ALL insurance companies put their toll-free numbers on the policy so that we can contact them DIRECTLY instead of being referred to our agent all the time!

  • February 7, 2013 at 5:45 pm
    Sherinae says:
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    Having a teaching degree when I begin my career in insurance, I felt obligated to teach my customers about the coverages that they want to purchase. Most of them seem to care less. I am just suppose to “get them some insurance” and then when they have a question, answer the question. I have even been told that they did not have time for “all of that crap”. And then when something came into question concerning a claim, I was accosted with words not found in the dictionary and told that I did not tell them “that” when they bought the policy. So, I do not think it matters either way. People do not want to take the time to understand what they are paying for. But they want someone to blame when things don’t pay on a claim like they think it should. In their eyes it is our jobs to make sure they get what they want as cheaply as we can get it and then we are suppose to make it work the way they think it is suppose when they have a claim or else fix it. No one wants to take personal responsibility for anything these days–that is the problem we face.

    • February 8, 2013 at 9:23 am
      Agent says:
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      Our E&O carrier constantly reminds us to document, document, document phone calls, letters, emails to customers so we have a defense in case an irate customer sues because a claim is denied or they didn’t understand what they were signing on a rejection of coverage. When we offer a needed coverage and the customer doesn’t want it due to cost, we ask them to sign an acknowledgment form. As I said before, we live in a distracted, dysfunctional society and people just aren’t paying attention, but they are quick to blame their agent if something happens.

  • February 7, 2013 at 6:09 pm
    Huh! says:
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    Sherinae hits the nail on the head. Nothing will change until most Insureds change their attitude.

  • February 7, 2013 at 6:11 pm
    Michele says:
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    One challenge we are facing as agents is that companies aren’t educating US on what the policy covers and doesn’t. Changes to the policy contract are sometimes only found when an insured questions something they received or one of us has a policy with the carrier and gets something as the insured. Additionally, it seems like some carriers are only giving us enough information to sell the policy, not educate the consumer about the policy. And with so many revisions of revisions and revisions to endorsements, it’s hard to wade through the contract to actually know if what you “think” you sold is actually what you sold.

    • February 8, 2013 at 2:15 pm
      Perplexed says:
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      Most company “underwriters”, not all, but the majority of them do not know what their policies cover. They have one or two products that they specialize in and they aren’t able to answer questions about that one BOP or similar policy they are underwriting.

  • February 7, 2013 at 7:06 pm
    Pierre-Michel Feuz says:
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    Let’s be fair……whomever, whichever Insurer, or Reinsurer puts forward a Cover for a Client, then he has a Duty of care whether it be directly to the Client (if no intermediary is involved) or to his Agents. How could an Insurer ever be represented by an Agent of his who would not be fully versed on the Products it makes available on the market place….it is the Insurer’s duty to convey his philosophy backed through his Underwriters accepting the risk. For a Broker in the main (Direct Broker as a Wholesale Broker’s Duty may slightly be different)he represents his Clients, and advises them….his responsiblity is to advise his Clients on whose behalf he is placing, hence having E & O covers should his advice fail or be unwise…his Duty of care is to advise wisely…it is up to him to seek clarity in what an Insurer puts forward, to in turn explain it to his Clients. No matter how difficult and complex a coverage is, the Insurer accepting it must be able to clarify to what extent he is willing to cover the particular risk, this verbally, in writing, via Policy or Wordings or in the documents ensuring that there is no ambiguity, so that the Client will know exactly where he stands. The U.K. and EEC are in the full process of reviewing the texts of their Insurance Acts (and other Jurisdictions around the World), to ensure a Client is treated fairly….which will mean that Policies and documents will need to be revised and reflect the latest trend in treating Consumers fairly. Clarity, education must therefore be promoted by all Insurers and conveyed to their Agents Representatives and Brokers.
    Why not promote and endeavour to educate Clients even from school (13 to 16 years old). Sandy will test texts, Clauses, exclusions, full Policies…will these be representative of what the Clients should have been offered if they have had losses – or are ambiguities in definitions going to impede negociations…..the result could be bitterness towards our Trade. Ask the questions, did we fail our Clients as Insurers, as Agents, as Brokers if any of us say yes, then surely we failed!!!! What are we going to do in the future. Can we learn, progress and remember our failings for WE ARE A SERVICE INDUSTRY, here to genuinely help Clients, no to sell them dummy Covers…

  • February 7, 2013 at 9:15 pm
    Nancy says:
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    Both. Carriers need to clearly communicate to agents what is covered and what is excluded so the agent can clearly explain what the insured in buying.

  • February 8, 2013 at 9:43 am
    Kevin says:
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    We should push to educate people about insurance while they are still in school. Our schools don’t prepare people for “real life” in my opinion and this would be a great place to start. Retired insurance professionals could be enlisted to teach these classes at minimal cost to the taxpayers.

    • February 8, 2013 at 5:21 pm
      Agent says:
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      Kevin, We have a Community College that offers a general course in Insurance. A retired CPCU teaches it and it is a pretty good basic course, but it is taken primarily by those who are seeking employment in the insurance agency business. They don’t have many consumers taking the course because let’s face it, insurance is a pretty dry subject and most people are just not interested in learning. They would rather download an app on their iphone on something they are interested in rather than learn what their HO or Auto policy covers etc. It is incumbent on the agent to do most of the heavy lifting and we are challenged because customers are distracted by so many things they just don’t pay attention. We send offers to bundle coverage for savings to monoline customers and they don’t respond to that either. It is quite amazing actually.

  • February 8, 2013 at 4:36 pm
    Debbie says:
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    I have worked both in agencies and on the company side. I feel strongly that the agent has the primary responsibility to educate their insureds. Agents have choices of which policies to sell and it is the agent’s responsibility to match the insureds’ needs with the company coverages. If the agent does not know what they are selling, the insured could simply order coverage on the internet.

    Insureance companies who educate the agents on the polciies coverages are the best carriers to work with. Having a knowledgeable marketing/sales rep helps the agent become knowledgeable.

  • February 10, 2013 at 7:41 pm
    Bob Trotta says:
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    I think insurance companies should FORGET all the LEGAL mumbo-jumbo and put the policies in PLAIN ENGLISH so that a homeowner does NOT need a YALE education to make heads or tails out of their policy and what is covered and what is not covered! You put in more loopholes to cover your butts to get OUT of paying a claim that your customers LOOK for ways to stay ONE STEP ahead of YOU! The worse the economy gets, the MORE EXCEPTIONS and mumbo-jumbo you insert into your policies! You may THINK we don’t notice, but we DEFINITELY do!

    • February 12, 2013 at 2:05 pm
      Anita says:
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      Sounds like Bob is a disgruntled policyholder.

      • February 12, 2013 at 2:07 pm
        jw says:
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        Or a troll.

      • February 12, 2013 at 2:09 pm
        jw says:
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        Just in case someone didn’t understand my reference to trolls, they are people who post random comments to get often vicious reactions. I didn’t mean to deride Bob’s heritage.

    • February 13, 2013 at 9:06 pm
      nomesaneman says:
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      Most US policies were put into “Simplified Language” in the 1980s and the language was supposedly understandable by a person with a 6th grade education. (no OFFENSE, Bob)

  • February 11, 2013 at 8:18 am
    Ron says:
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    Bob,
    Policies are in plain english. Just because there are a lot of words, does not mean it is written in a foreign language.
    The problem is not the policy language, it is the fact that most insureds do not care and/or do not have the time to allow their agent to explain the coverages. Most agents prefer to educate their clients, but how do you do that without a captive audience?
    It is interesting that as more exceptions and legal mubo-jumbo have been inserted in the policies, claims satisfaction has actually increased. (http://www.jdpower.com/content/press-release/Gufklu3/overall-customer-satisfaction-with-homeowners-insurance-claims-experience-increases-despite-record-number-of-storm-losses.htm)
    Do you know why there are so many exceptions and legal mumbo-jumbo? It is becasue the courts side with the insured if there is any ambiguity. If the courts were to make decisions more on the intent of the language, you would get what you want. What happens is that lawyers find any slight amount of ambiguity that may favor their client and use that leaving the insurance companies with no other option but to remove that ambiguity making it more clear. Either that or increase premiums by a significant amount (100-300%) to cover the unintended exposures.
    My brother once asked me why an insurance company would not create a policy with no exclusions. My answer, it would cost more for the policy than to not have any insurance.

  • February 11, 2013 at 11:57 am
    FabIns says:
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    As a professional, I feel it’s important to impart knowledge on customers. Captive agents and their companies are the crux of the problem because the agents are trained to peddle, and they are divorced by company policy from the claim process. Their product knowledge is limited to the few sub-par products their carriers push.

    I blame the regulators in various states where the standard of care for agents is that of order-takers. Yes, the general public seems to choose to remain ignorant and will wait until there eyes are opened by a catastrophe to blame others by litigation, but agents should make it their business to know what they are talking about, and impose this knowledge whether the customer is listening or not; followed by their signature.

    One of the best ways to avoid the whole question is to do your job right the first time. If your carrier’s product is sub-standard, well i would suggest you find a real insurance company to represent, and not some weasel carrier which sells primarily through uninformed captives and websites.

  • February 14, 2013 at 2:24 pm
    Rosenblatt says:
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    1) It’s EVERYONE’S responsibility to know what the contract affords and doesn’t. If I’m paying for a service (as an insured), I want to know everything that’s covered & what isn’t. If I’m the carrier, I want my insured to fully understand the policy to avoid confusion/lawsuits/”bad faith”/etc. If I’m the agent, I want my customer to feel confident that I know what I’m selling them.

    “Right now, “…The last thing the agent wants to do is spend time with the customer to say this policy is really bad; it covers almost nothing and costs you a fortune. Or let me tell you what it doesn’t cover [and] let’s talk about how you’re exposed.”

    Does this generalization mean agents just want to sell the policy without explaining what’s covered? Are the agents basically thinking “I can’t wait to make my commission on this idiot who doesn’t know what he’s buying!”? What a HORRIBLE way to start off an insured/agent relationship. As the insured in this situation, I would never trust my agent if it turned out I couldn’t file a claim for something for which I thought I had coverage.

    It’s easy to blame anyone here, but the truth is, everyone is to blame. Shame on you customer for signing a contract and paying money for something you don’t understand. Shame on you agent for not caring about your relationship with the insured by taking the time to explain what the person is buying. And shame on you insurance carriers for not trying to make the language even more clear for all to understand.

  • February 15, 2013 at 11:45 am
    Middle Market Underwriter says:
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    It is the carrier’s responsibility to act as a trusted advisor to the agent/broker and explain the program that they are providing. The agent/broker also needs to do their job and work to understand the program that the carrier is providing. After that, it becomes the job of the agent/broker to explain the coverage to the insured. That is what commission dollars are for . . . The underwriter at a carrier is not the insurance advisor, they are the insurance provider. The agent explains the terms and conditions that each carrier is willing to provide to their client so that the client can make an informed decision on what program is best for the exposures that their operations present.



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