Recurring shortcomings in 2023 that resulted in complaints: Identifying and avoiding them
In 2023, the Syndic’s Office opened 406 investigation files. Most of these files concerned the following grounds for complaint: negligence, failure to explain and inform, poorly carrying out the mandate, attitude and personal information.
On average, 10% of the investigations led to the filing of a formal complaint before the ChAD’s Discipline Committee.
What prompts consumers to file a complaint against their agent, broker or claims adjuster? The reasons vary: excessively long processing times, insufficient explanations, lack of on-going communication, poor settlements, etc.
Certified members commit ethical errors for a variety of reasons: a lack of attention, care or accuracy in carrying out their professional activities, a careless attitude, lack of knowledge, etc.
In order to help you reflect on your professional practice, and ultimately improve it, here are the five shortcomings most frequently cited as grounds for complaint that you should identify and avoid. Each story is based on* an investigation that the Syndic’s Office carried out, which resulted in an administrative measure.
Mastering best practices in damage insurance is at the heart of protecting the public. The ethical breaches presented below could have been avoided. As an agent, broker or claims adjuster, your vigilance, sound advice and accountability are confirmation of the added value you provide as a professional, and the trust that consumers put in the industry and its representatives.
* Any information enabling the identification or recognition of an insured or a certified member has been removed from these stories. This article is purely preventive in nature and is designed to provide ethical guidance with respect to issues that repeatedly arise in the industry.
1. Negligence
The Story
Jeanne contacts her agent and tells him that her spouse has left the family residence. She asks the agent to take her ex-spouse’s name off the home insurance contract.
The Shortcoming
The agent carries out Jeanne’s instructions without obtaining the ex-spouse’s consent to have his name taken off the contract.
How to avoid it
The agent had an obligation to contact the ex-spouse to ask for his consent and confirm Jeanne’s instructions. As a conscientious professional, the agent could have also raised certain important issues with the ex-spouse since the agent’s role is also to advise. For example, does the ex-spouse have his own home insurance policy to insure his new home since his departure from the family residence? Acting without consent could lead to unfortunate consequences for the insured, including finding himself uninsured.
In summary, remember that making such changes to an insurance contract that includes several insureds requires obtaining consent from every co-insured. To this end, the agent or broker must act with care, vigilance and accuracy, pursuant to sections 9 and 37 (1) of the Code of ethics of damage insurance representatives. Best practices also include explaining the changes requested to the co-insureds and carefully noting in the client-file all instructions, consents and information provided.
2. Failure to explain and inform
The Story
Luis informs his broker that he needs insurance for his new house. Due to the nature of the risk, the insurer only suggests a named perils insurance policy. The broker explains to Luis that the building will thus be covered for basic risks, including fire and theft. Luis accepts the proposal.
The Shortcoming
The broker does not provide Luis with an in-depth explanation of the special features of his named perils policy. As a result, even though the client is aware of the basic risks for which he is insured, he does not necessarily have the knowledge required to automatically understand the limits and exclusions of his coverage. What would happen if, for example, the sewer backed up or an earthquake occurred, or part of the roof collapsed due to a heavy snowfall?
If a loss that is not covered unfortunately occurs, Luis could feel he had been harmed since he did not receive the explanations he needed to fully understand his insurance contract.
How to avoid it
The representative’s advisory role is directly connected to his obligation to provide the client with the information he need to understand what he has purchased, as stipulated in section 37 (6) of the Code of ethics of damage insurance representatives.
Furthermore, if an agent or broker takes over a file from another colleague, he must not assume that the colleague has given the insured all the information required to understand the insurance contract. Best practices dictate that he must confirm information previously given and, if need be, complete the explanations.
In cases where the client chooses of his own accord a named perils contract, or if this is the only option the insurer offers to insure the risk, you must:
- Clearly explain to the client the contract’s limits and exclusions as well as their impact should a loss occur;
- Ensure that the client understands the information provided;
- Note your explanations in the client-file in order to protect yourself in the event of a dispute.
3. Poorly carrying out the mandate
The Story
Marta purchases insurance for her retail business. During the needs analysis, her broker asks her questions, which include questions on the building in which the business is located, since she owns the building. Square meters, year of construction, renovations, claims history … every issue imaginable. The broker enters the information he receives into the insurer’s calculation software in order to evaluate the cost of rebuilding. The software shows $500,000.
The broker asks her if she believes this amount of insurance is sufficient.
Marta replies that it seems to make sense, and that she trusts the insurer’s software.
Before signing on the dotted line, Marta takes some time to think things over. Two weeks later, she calls her broker back to tell him that she was mistaken about the building’s surface area in square metres, since she forgot to include a large storage space in the basement.
The Shortcoming
The broker corrects the number of square meters in the request for a quote that he had sent to the insurer, but neglects to adjust it in the calculation software to revalidate the reconstruction cost of the building. The reconstruction cost remains unchanged in the quote, whereas in theory it should have increased due to the change in the building’s surface area.
The result: the insured is underinsured in the event of a claim.
How to avoid it
The insurer determines the terms and conditions of the insurance contract, including the insurance premium, based on the information you provide. Since you are the professional responsible for the client’s file, you are also responsible for sending the insurer the information required to assess the risk, as stipulated in section 29 of the Code of Ethics of damage insurance representatives.
Moreover, you must act on your client’s instructions and fulfill your advisory role in accordance with sections 26 and 37(6) of your Code of Ethics.
In this case, the broker did not diligently handle the new information had Marta provided. By failing to re-validate the cost of rebuilding, the broker failed to provide the insurer with all the information it needed calculate the insurance premium and failed to properly respond to Martha’s instructions by not insuring her building for its fair reconstruction value.
4. Attitude (lack of moderation and objectivity)
The Story
The Syndic’s Office of the Chambre de l’assurance de dommages is investigating actions taken by claims adjuster Laeticia. The case concerns certain deadlines she missed when processing a claim. The investigation is very stressful for Laeticia, who has trouble controlling her emotions.
The Shortcoming
While on the phone with the investigator assigned to the case, Laeticia loses her temper, challenges the investigator regarding questions he asked her and claims that the investigator is going to “ruin her life.”
How to avoid it
At all times, you must conduct yourself in a professional manner characterized by objectivity, discretion, moderation and dignity, in accordance with section 15 of the Code of ethics of claims adjusters and section 14 of the Code of ethics of damage insurance representatives. This also applies to any discussion with an individual from the Syndic’s Office. The investigator cannot carry out a full verification of the facts if communication is hampered by the certified member’s inappropriate attitude.
Remember: By the very nature of their duties, investigators are professionals who are respectful of all individuals they contact during the course of their investigations. Their work is dictated by the law: they verify facts. If you have any questions, your investigator will provide you with information on how investigation files are handled and clarify what is required of you.
5. Personal information
The Story
Paul’s home has been burgled. He reports the incident to a claims adjuster working for his insurer. In order to process the claim, the adjuster needs to verify Paul’s personal information.
The adjuster sends Paul a form entitled Consent for the collection and disclosure of personal information, authorizing the adjuster to obtain a copy of the police report, as well as invoices or proofs of purchase from suppliers. Paul signs the form.
However, Paul does not check off the boxes in the section on the insured’s financial situation, which includes his credit history.
In the course of the investigation, the adjuster notices a number of signs that the insured may have made a false claim. He decides to investigate further.
The Shortcoming
As part of his investigation, the adjuster orders the insured’s credit files, among other things, to check whether the latter is in financial difficulty. If so, this would be a potential motive for making a false claim to the insurer.
Once he receives the insured’s credit files, the claims adjuster proceeds with their analysis.
How to avoid it
Claims adjusters must obtain the insured’s prior consent before collecting personal information from third parties, as stipulated in section 6 of the Act respecting the protection of personal information in the private sector.
In the above case, the claims adjuster collected Paul’s personal information (credit history) without his prior consent, knowing full well that the insured had not checked the box on the form authorizing him to do so.
Consent must be manifest, free, informed and given for specific purposes, and it is valid only for the time required to achieve the purposes for which it was requested. In addition, during the course of your work, you must never neglect your professional duties to the insured under sections 10 and 58(1) of the Code of ethics of claims adjusters.
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