|7 Tips On Commercial Lines Insurance||7 Tips On Commercial Lines Insurance||http://chad.ca/en/members/professional-practice/industry/commercial-lines-insurance/444/7-tips-on-commercial-lines-insurance|
This non-exhaustive list of commercial lines insurance tips is based on observations made over the years during inspections, on points drawn from disciplinary rulings, as well as on questions raised during training sessions. Most of these tips also apply to personal lines insurance.
Tip No. 1: Record keeping must be flawless and complete.
This tip is number one on the list, since it also applies to everything that follows. Notes in the client-record may be the only proof that the representative took all the necessary steps to fulfill his professional duties. Nothing can justify a representative not taking the time to write down all the information required in the client-record: both the representative’s and the client’s protection depend on it! Clear, complete, orderly notes bearing the date at which they were taken allow you to effectively manage complaints or, even better, avoid them. And yet a lack of proper notes in client-records is one of the most frequent shortcomings observed every year during inspections carried out by the ChAD.
In particular, records should contain information on coverage offered and refused, advice provided to the insureds, a summary of meetings and telephone conversations, as well as copies of e-mails exchanged and relevant documents.
The ÉduChAD e-course, Notes aux dossiers pour les représentants [Notes in Client Records for Representatives, available in French only], reviews all the information that must be noted in the client-record.
Tip No. 2: Visit the site.
Visiting the site is an important aspect of commercial lines insurance. In addition to seeing the client’s premises and what steps he is taking to prevent losses, the representative will also be able to assess any potential risks in the neighbourhood, for example.
Thanks to new technologies, some of the scouting can be done on the Internet, in particular using Google Street View. Although this tool is free and easy to use, it is worthwhile remembering that the images on Google Street View “could be anywhere from a few months to a few years old,” and that “most of the images [on Google Maps] are about 1 to 3 years old,” according to official Google sources. It is therefore important to complete the data collection by actually visiting the site.
Tip No. 3: Have the building as well as all property and/or equipment appraised.
In order to offer the client the coverage that best meets his needs, the damage insurance representative must know the value of the building and property to be insured. However, a representative’s professional acts do not include conducting building and property valuations. The representative must therefore recommend to the client that he call upon the services of a professional appraiser to determine the actual value of the building and property. The representative cannot be held liable if the client refuses to have a professional valuation done, however, he must put down in writing the recommendation he made to this effect, as well as the client’s response.
Furthermore, the damage insurance representative may not accept an amount that he knows to be insufficient without providing the insured with an explanation of the risks related to underinsurance, and, if applicable, the risks related to the co-insurance clause. Some professionals even go so far as to have the insured sign an attestation confirming that he has heard and understood the explanations his representative provided to him regarding this issue.
It is also important to remember that representatives must not systematically rely on the amount of insurance indicated on the policy that is about to expire. It is crucial to take the time to carefully review this amount.
Tip No. 4: Explain the exclusions and limits.
Damage insurance representatives have a duty to both inform their clients of exclusions and limits contained in the contract, and explain such exclusions and limits to them. While this does not mean the representative reviews every aspect of the exclusions with the client, he must nevertheless provide the client with information on exclusions that could affect him. By the same token, though he cannot suggest every existing endorsement, he must at very least offer the ones that most closely meet the needs the client has expressed.
It is also essential that the representative inform the client of any limits and conditions included in the contract, and never take for granted that the client is already aware of them. Contracts vary from one insurer to another, just as insurance needs vary from one client to the next. Service must be personalized: the contract the representative offers should be “made to measure” in order to meet the needs of each client.
Tip No. 5: Be conscientious about renewals.
For a variety of reasons, the renewal process in commercial lines insurance is often marked by time constraints and other unforeseen events. Inasmuch as possible, representatives must therefore make adjustments and deal with the unexpected in order to complete their work. It is thus wise to acquaint oneself with the insurer’s renewal process as soon as possible in order to have a “plan B” for placing the risk elsewhere, if necessary.
While a needs analysis is essential to creating a quote that contains the right coverage, this analysis is just as important during the renewal process, as well as when records are transferred. ChAD inspections sometimes reveal that clients’ needs are not always re-examined. Re-examining the risk overall does not just enable the representative to prevent past errors from being repeated; it also allows the professional to ensure that the coverage currently in force is sufficient, that insurance amounts are accurate, and that loss prevention measures have been put in place. If need be, the representative can provide advice to the client by re-suggesting previously refused endorsements or new endorsements likely to meet his needs.
The Policy Renewal procedure found in the Tool Box can help representatives fulfill their obligations in this area. On-line training is also available on ÉduChAD (in French only).
Tip No. 6: Notify the client of all fees charged.
Pursuant to sections 21 and 22 of the Code of ethics of damage insurance representatives (the Code of Ethics), professionals may charge fees, in particular if the file requires more work and is more complicated than an ordinary file. When total fees do not exceed $250 for commercial lines insurance (or $50 for personal lines insurance), fees may be disclosed after the service is provided by including a note on the invoice. However, in the interests of transparency, it is recommended that the client be notified of these fees and the amount in advance and in writing. This avoids any misunderstanding or frustration. At the time of the transaction, the client must accept these fees.
Tip No. 7: Store records properly.
Firms and professionals must store their records (digitized or hard copy) in their entirety for five years after the date of the last transaction noted in the record. The last transaction means the permanent closure of the file, the date at which the last service was rendered or the expiration without renewal or replacement of the product sold.
Tenue de dossiers [Record Keeping, available in French only], a course available on-line at ÉduChAD, addresses, amongst other things, the rules governing the preservation of client-records.
Tools for evaluating a building’s value
Tools and software exist to calculate the cost of rebuilding. However, they all have their limits, which should be taken into account when using them. Consequently, these tools cannot replace a professional evaluation.
Respect your certification, limits and abilities
To pursue activities in the field of commercial lines insurance, representatives must hold a certificate in commercial lines insurance (3C or 4C) or in the entire sector (3A or 4A).
Furthermore, a duly certified representative must never make any assumptions regarding his abilities, knowledge or the means available to him (sections 16 and 17 of the Code of ethics of damage insurance representatives).
Dealing with certain risks requires special expertise and such expertise is even more crucial in commercial lines insurance. When in doubt, a representative should ask a qualified representative for assistance in order to meet the client’s insurance needs.
|5/2/2016 8:23:57 PM|