Five questions you had about your professional practice in 2021
For the last two years, Accent Déonto has listened to you and answered your professional practice questions. The ChAD created this support service on compliance and ethics to be your value-added, innovative, synergistic partner and go-to reference on professional practice.
In 2021, certified members asked Accent Déonto over 1,400 questions on a variety of professional practice-related topics, including the reservation of rights letter, non-waiver agreements, record keeping, consent and personal information, tough markets and terminating a mandate, and obligations to the insurer.
Here are five of these questions and the answers that helped you implement best practices in real-life situations.
1. Claims adjusters: what should you do if the insured refuses to sign the consent form?
The situation: You need to gather personal information from an important witness in a civil liability claim. The insured gives consent but refuses to sign the “Consent form for the collection and communication of personal information when making a claim.” What should you do?
Answer: Before collecting, using, or communicating the personal information of any party (claimants, insureds, third parties), you must obtain their (written or verbal) consent, and ensure this consent is noted in the client-file. When consent is verbal, make sure to note in the file all the information you gave to the insured as stipulated in the Act respecting the protection of personal information in the private sector. This includes the object of the collection of personal information , how the information will be used, the categories of persons who will have access to it within the company, the location where the file will be kept, and the rights to access and rectify. Read the page on Consent and Communication of Personal Information to find out more.
The situation: A commercial-lines damage insurance broker learns that an insurer will not be renewing the contract of one of his clients, a recycling sorting centre. The broker knows this market well and doubts he will be able to find a new insurer for the company. If this happens to you, what should you do?
Answer: You must be transparent with your client and notify him of the insurer’s decision as soon as possible. Use all of the following best practices that apply to your situation:
- If you do not believe you will be able to place the risk elsewhere, quickly notify the insured and send him a termination of mandate letter (read the procedure).
- If you believe you will be able to find a new insurer, notify the client of your intention to do so, the steps you will take and the potential consequences, including a higher premium or deductible, or changes in coverage. Start by discussing the possibility that you will be unable to find another contract and explain what the client will have to do should this happen. Notify the client if he must take steps to find an insurer that you cannot do business with yourself.
- If, despite all your efforts. you are unsuccessful in placing the risk, send the insured a termination of mandate letter listing the insurers you approached who refused to accept the risk.
To learn more, re-read It’s a hard market. What’s a broker to do?
3. The reservation of rights letter and the non-waiver agreement: the importance of providing explanations to clarify matters for the insured
Actual case: A claims adjuster must have the insured sign a non-waiver agreement since the insurer needs to further analyze whether the property damaged when the loss occurred is covered. The insured refuses to sign because he does not understand the purpose of the document. What should the adjuster do?
Answer: As an adjuster, it is your obligation to provide insureds with the explanations necessary for them to understand how their claim will proceed. Your explanations must be such that the insured understands that the insurer is continuing to investigate, that it has not yet confirmed that the loss is allowable, and that it reserves the right to refuse compensation if the loss is not allowable, or to invoke exclusions provided for in the contract. Please note that the insured is not obliged to sign the non-waiver agreement. If he refuses to sign it, he must be sent a reservation of rights letter. Under such circumstances, the claims adjuster must comply with his obligations regarding the use of this letter. You must always continue to keep the insured up to date on the investigation, timelines, and how the claims adjustment is proceeding.
To learn more, read the reservation of rights letter procedure, which also explains the difference between this letter and the non-waiver agreement.
Here is an article that you can give your clients to provide them with further information: Avis et reconnaissance de réserve : que faut-il savoir? [Reservation of rights and the non-waiver agreement: What do I need to know? article in French only]
4. A reminder regarding some best record-keeping practices
The situation: A broker writes fewer and fewer notes in his client-files. He believes that recording all his calls helps him save time with record keeping. When in doubt, he relies solely on the recordings of his phone conversation. Is this a best practice?
Answer: No. A voice recording does not relieve the agent, broker or claims adjuster of his ethical obligation to make notes in the client-file. Failing to note in the client’s file such things as actions taken, summaries of meetings and telephone conversations, relevant emails, mandates received and carried out, or offers and refusals of coverage can all be deemed to be negligence under the codes of ethics of representatives and claims adjusters. The Regulation respecting firms, independent representatives and independent partnerships also stipulates the information that must be recorded in each client’s file.
For further information, re-read Un enregistrement vocal remplace-t-il une note au dossier? [Does a voice recording replace a note in the file? in French only] as well as the section on Record keeping at chad.ca.
5. A reminder regarding the obligation to give the insurer the information that it is common practice for you to provide
The situation: When it is time to renew his home-insurance contract, the owner of a triplex informs you that two of his flats have been empty for the past six months. He asks you if this must be mentioned to the insurer. In the process of purchasing insurance, an insured admits that she has previously had her contract cancelled for non-payment of her automobile insurance premium. She asks you to not mention it to the insurer, otherwise she will take her business to another broker. What are your obligations? What must you declare to the insurer?
Answer: The information you provide to the insurer must match the insured’s actual situation. You are not the only one whose duty it is to “give insurers the information that it is common practice to provide them [with]” (section 29 of the Code of ethics). In fact, the insured is also bound to “represent all the facts known to him which are likely to materially influence an insurer in the setting of the premium, the appraisal of the risk or the decision to cover it” (article 2408 of the Civil Code of Québec). You must explain to the insured that non-compliance with these obligations may result in serious consequence for him. For example, in the event of a loss, he might be refused compensation.
Under no circumstances may you withhold or tamper with information in order to obtain a better premium for your client. To learn more, re-read this actual case. Furthermore, even information discovered accidentally must be sent to the insurer. To find out more, read this article on the topic.
To ensure your clients are properly informed, share this article with them: L’assuré doit dire la vérité [The Insured Must Tell the Truth, in French only]