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Agency Management

Questions & Answers

E&O Prevention
Employee Management
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E&O Prevention

Are signature flags E&O hazards?

The use of signature flags, or "X" designations, is not a violation of law and is not, per se, an E&O “no no.”  However, by using a "sign here" flag, you are clearly opening yourself up to a potential claim by your clients: that they were misled into signing something that they did not intend to sign or into selecting a limit that they did not intend to select.

If your agency insists on using a "sign here" flag, then you need to take every precaution to insure that the line you are asking the client to sign is the correct line, and perhaps also include in the cover letter a request to the client to double-check the selections that are being made by the client.  

About pre-filled applications, generally
The signature flags issue begs the more general question of how you should handle an application that is essentially pre-filled, or completed by the agency, and then sent to the client for execution. Are there other pitfalls?

On a purely customer service level, this practice is common. Agents often know their clients well, and are able to complete a majority of the information in an application without the client's help. In addition, an agency often has a prior application in its file from which the agent can copy the relevant information onto a new application. Doing this saves the client a lot of time and hassle in dealing with the completion of an application.

However, when you decide to complete an application on behalf of your client, you should do the following:

  • Make sure the information is correct. When in doubt, call the client to verify.
  • Request that the client review the application and verify the information it contains.
  • Make the client sign the application. Don't EVER sign for the client, and verify (if possible) that the client in fact is the one who signed the application. As an example, if the application is signed by an unauthorized person (i.e. office worker, spouse, etc), the carrier might get stuck paying for the loss (despite material misrepresentations in the application) and look to the agency for indemnification.

Finally, even though you complete an application, when the client signs the application, he or she is attesting to the accuracy and truth of the information in the application. This is a defense that will be used on E&O claims.

Need a sample letter? A sample letter is now available for members to personalize and use for just this purpose. For those agencies using an electronic-transaction service where the signature flags are embedded electronically, the sample letter can simply be copied and pasted into an electronic cover letter accompanying the documents. Access the sample (04/2017)

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Are there any E&O implications to sending policies to clients electronically?

More and more companies have started moving to electronic delivery of policies, and the question of E&O implications is legitimate, whether the policy is e-mailed or sent as a CD. With more prospects completing applications, receiving quotes and securing coverage online, it stands to reason that the person would be willing to receive an electronic copy of a policy. By the same token, there are also many customers who still purchase insurance the “old fashioned” way.

Consent is needed - Electronic transactions, including delivery of policies, are possible if there is prior consent. Keep in mind that some customers will still expect or request to receive paper documents, particularly if they don’t have the computer or software necessary to receive electronic documents. In this area, both as a matter of common courtesy and as an E&O protection, you need to ask the customer how he wants the policy delivered. It may be a good idea to try to secure the client's consent to receive policies in electronic form upfront, which can easily be done by using a form at the same time the application is signed (that includes a statement that the customer should update the agency if/when his e-mail address changes). Regardless of timing, the consent should be in writing.

Proof of delivery - From an E&O standpoint, what is important is that no matter which method the customer chooses, an agency must be able to demonstrate that a complete policy has been delivered to the insured. The "duty to read" a policy is one of the first lines of defense for a producer. It can only be used if the policy was delivered prior to the loss.

Some state laws provide a presumption that the mail was actually received if it was properly sent to the recipient.

  • If the agency is sending policies on a CD, the CD should be mailed the same way as a paper copy; and as with other regular mail, established office practices and consistency are key.

  • If the agency procedure is to forward an electronic policy via e-mail, the agency should take appropriate measures to ensure that the system results in actual receipt of the document (you could use return receipt or notice of undelivered e-mail features. This process should be applied consistently and be reflected in the agency's policy and procedures manual.

Privacy protection - The system you are using should protect the confidentiality of the information. We need to remember that some policies may contain sensitive information. E-mails are known to be unprotected if not encrypted, and while we focus on the proper reception of the policy by the client, an area that could become a future issue for the industry is privacy and proper protection of these e-mails and their attachments. As a consequence, if an agency decides to proceed with e-mailing policies to clients, it seems reasonable, in addition to the client's consent, to favor systems that provide some form of protection (encryption or otherwise) until this area is either regulated or litigated. Some products (such as RPost) combine verification that the e-mail and attachment have been received with an encryption option.

Access a sample consent form and more information on the basics of electronic transactions

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Do I need to use a disclaimer when providing loss control, risk management or safety-consulting services?

Absolutely. It is likely that your E&O carrier, whom you hopefully have made aware of your activities, has advised you to do so. In short, the disclaimer is meant to narrow the extent of your services and protect you from your customers claiming that you did not deliver on your promises.

What should the disclaimer state?

  • The purpose of this type of disclaimer is mainly to state that the intent of the work performed is not to identify all hazards, but to assist the customer in the identification and control of hazards, as well as to assist with loss control efforts and implementation and maintenance of a safety program.

Where should the disclaimer be placed?

  • Contracts, inspection reports and marketing materials should all include disclaimers.

Where to find a sample disclaimer?

  •  We offer a sample disclaimer specifically for loss control, risk management and safety-consulting activities.

The information contained in this resource is current as of the original publication date: March 14, 2011

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Can we make a "good will payment" on our insured's uncovered claim?

The reality is that many agencies occasionally engage in “good will payments.” From time to time, based on various circumstances, an agency may provide a good will payment to one of its clients if they were to suffer a loss that was not insured or not fully insured. The agency might view it as a recognition of loyalty.

Could this kind gesture backfire? Could this payment be viewed as an admission of liability? There definitely have been scenarios where the good will payment by the agency took on a new life and became a major headache for the agency. Proper planning should keep this from happening.

If your agency finds itself in a situation where you would like to make a good will payment, it is highly recommended that you contact and discuss the matter with your E&O carrier before you do anything. Whether you decide to write a letter that goes with your payment or choose not to communicate at all, the risk that the gesture may be interpreted against you is there ... and it will not take long for a freshly minted attorney to suggest that if you paid, it was because you felt you did something wrong.

In addition, should the worse occur and an E&O claim be filed, you may have already made a payment that will not count towards your E&O deductible; yet another unpleasant development.

E&O carriers are well aware of the issues associated with good will payments and can provide the guidance and direction to ensure that the matter does not blow up on your agency. They will ask you various questions to better understand the claim and the potential for that claim to develop adversely. In all likelihood, they may discuss and provide a document for you to get your client to sign that acknowledges the payment by your agency, but clearly states that this payment should not be viewed as an admission of liability.

CAUTION: When reviewing the document with your E&O carrier, be mindful that the good will payment should not appear to be a reward for renewing the policy with the agency, as this could trigger a rebating violation. Even when simply trying to do the right thing, agents must walk a fine line. Keep that in mind!

These matters occur with some degree of frequency, and the action on the part of the agency is normally very well received by the customer. Including your E&O carrier in the discussion should ensure that this remains a very positive experience.

The Utica National E&O Program supplied this article. We are the exclusive agent for the Utica E&O program in Delaware, Maryland and Pennsylvania. For questions regarding your E&O coverage, contact us at (800) 998-9644 or

The information contained in this resource is current as of its original published date: Feb. 23, 2012

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Could I have an E&O issue if I fully rely on what the risk manager is asking for without clearing everything with the owner?

It is not unusual for a producer to discuss insurance with an employee who is not an officer of the company. While that person is presumably in charge of insurance and able to make decisions on behalf of the owner/principal, if there is a problem later, the customer could try to challenge the coverage selection made by the employee and argue that you should have verified this with the owner. By the same token, you don’t want to alienate the new customer’s goodwill by constantly checking every request with him or her.

1) Address the delegation of authority up-front
To avoid this thorny issue, we suggest you address the delegation of authority upfront. If anything, it will show that:

  • You recognize the owner’s or principal’s authority in making decisions
  • You are taking direction from the owner himself to determine who the decision-maker will be with regard to insurance

2) How do I accomplish this?
Obtain a simple statement which should:

  • Identify the individual to whom authority is delegated
  • Identify the extent of that authority
  • Be typed on the customer’s company letterhead
  • Be signed by an officer of the company

For example:
"We/I hereby authorize [name of individual] to represent [name of organization] in insurance matters. [Name of individual] has the right to discuss coverages, make any and all changes, sign insurance documents, and is generally acting as an authorized representative of [name of organization].
_____________________________ __________________
Signed by officer as specified above Date

Officer title

3) Recognize who can delegate this authority
For each type of business (corporation, LLC, partnership, association or sole proprietorship), review our resource on granthing autority to sign insurance documents and view a table stating whose signature is acceptable.

Review our resource on granting authority to sign documents

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When binding coverage, should we issue a “physical” binder?

Is it absolutely necessary to deliver a written binder for coverage to be afforded? No. An oral binder can be valid, just as an oral contract can be. It stands to reason, however, that when a contract is executed orally, the evidence becomes more tenuous.

According to Couch on Insurance (a leading treatise on insurance law), “whether a binder effects temporary, current insurance is a question of the intention of the parties.” While it can be – and usually is – brief, “it represents the insurance agreement at that point, and it is critical to know what is covered and what is not.” There you have it! The binder is a document that is there to ascertain that coverage was granted and, to a certain extent, what coverage was granted.

As Couch states, the issue of written versus oral binders really boils down to evidencing the intent of the parties. When a claim occurs between the effective date of the binder and the issuance of the policy (and they do!), the documentation relative to the binder will be an important element to determine that intent. Relying on verbal statements will be prone to potentially conflicting memories … particularly after a claim has occurred. So what do you do?

  • Is a written binder better? Yes, we would argue it is.
  • How detailed? A binder will never be as detailed as a policy, nor should it. However, it is best not to omit policy essentials
  • Things to take into consideration: Does your agency agreement or company guidelines state anything about the need to issue the binder in writing whenever coverage is bound? If so, you now have a contractual duty to do it.
  • Will this solve all issues related to binders? Probably not. There is always room for ambiguity, because again, the policy has not been issued yet. It will, however, help in ascertaining what you and your customers had agreed upon, and that’s exactly what it’s supposed to do.
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How can someone without a Power of Attorney ask questions and make policy changes on behalf of a named insured?

Let's use the example of an elderly named insured whose daughter takes care of her finances but does not have a Power of Attorney (POA). The proper way to handle such a situation is for the daughter to secure a true POA from the named insured and provide you with a copy. The daughter is not the named insured, is not a party to the contract, and cannot make policy changes without a Power of Attorney. If your insured wants to secure a POA, the best would be to suggest she contact her attorney.

Asking questions” is a different matter, which speaks to your privacy obligations: You may be able to share information with the daughter if you have secured consent from the named insured. A POA would not be necessary for that purpose. Any other way of evidencing her consent would be acceptable (although we would encourage you to get it in writing).

Although not directly related to this question, if this were a commercial risk where the producer may be discussing coverage with a risk manager rather than an officer of the corporation, we have developed a form that enables the officer of the corporation to delegate authority to discuss insurance and make certain changes. Along with the sample, we provide a guide identifying who should be signing the delegation of authority based on the customer’s business structure (sole proprietorship, partnership, corporation, etc.).

Access our resources (select "Granting authority to sign insurance documents")

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Can we provide financial information about carriers to prospects or policyholders?

When communicating about financials, you should always draft your message carefully. That being said, let’s distinguish general comments on an insurer’s financial condition and how the restrictions can play into notification to customers of an insurer’s downgrade by a financial rating agency.

Defamation prohibited
State statutes – and our three states are no exception – generally place restrictions on what producers and others can state with regard to an insurer’s financial condition, particularly if the description seems derogatory, maliciously critical or generally defamatory. If you are commenting on the carrier with whom the prospect is currently insured and you are critical of their financials, the practice is more likely to be questioned; it could be viewed as an attempt to sway the insured and deemed unfair competition. In fact, the statutory restrictions are generally found in the Unfair Trade Practices laws.

Notification of downgrades
The above should be distinguished from letters sent by agencies to policyholders notifying them of carrier financial downgrades. Many agencies notify customers of an insurer’s downgrade (for various reasons including E&O prevention). While the same restrictions on defamation apply, notification is fine as long as you remain both factual and cautious when communicating that information. For agencies wishing to notify insureds of carrier downgrades, we would suggest reviewing our related online resource (which includes sample letters), “Do producers have a legal duty to notify policyholders when their insurer has been downgraded by a financial rating agency (such as A.M. Best or Standard & Poor’s)?” – available at

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Should I comply with a lender’s request for a copy of the Replacement Cost estimate for the property on which they will be providing a loan?

The best practice would be not to provide a copy of the RC estimate. If you choose to do so, however, we would encourage you to take some precautions, as indicated below.

First, let’s look at the different issues separately:

Lender’s guidelines – Lenders sometimes will state that their guidelines require review of the RC estimator. However, as an agency:

  1. You have no obligation to comply with guidelines drafted by a lender, and
  2. Fannie Mae guidelines – which most lenders rely on – do not impose any such requirement.

Estimate – As the name indicates, the RC estimate is just that, an estimate. It is not an exact science. Producers who have used them for any significant amount of time know that the values can differ greatly depending on the software used, the criteria defined in the estimator, and the data that is input. (As the saying goes: “garbage in, garbage out.” If the data used is not accurate, neither will be the estimate.)

In the end – If you are going to provide the information to the lender, we would suggest the following:

  1. Get consent from the customer. While under the state’s privacy regulations (at least in Delaware, Maryland and Pennsylvania), you may be permitted to disclose information to a party “holding a legal or beneficial interest in the consumer” (something that a mortgage holder could claim), many lenders will ask for this information before this beneficial interest is established.
  2. Provide a disclaimer along with the RC estimate such as this one:

The limits indicated on this application have been selected based on information provided by the applicant and the use of a 'replacement cost estimator.' Replacement cost estimators are regularly used in the insurance industry to attempt to determine the cost to rebuild the dwelling if it is destroyed.

As the name indicates, the numbers are only estimates, and may not fully account for specific property features. Rebuilding costs are also subject to fluctuations due to market conditions. The actual cost to repair the building and/or replace the property may exceed the amount calculated by the estimator and the limits selected.

[Insert name of Agency] makes no representation as to the accuracy of the replacement cost estimate, now or in the future. If in doubt about the limits selected, the applicant/policyholder should seek a professional appraisal or the assistance of a builder to assess reconstruction costs.

This disclaimer, along with other related tools, is available at prevention.

About the special language requested – Finally, you should also refrain from adding any language to the evidence of insurance document that suggests “100 percent replacement cost,” “guaranteed replacement cost,” “full replacement cost” or any similar wording. Such provisions can be viewed as a misrepresentation of the policy and a violation of the producer licensing statute in your state.

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Are ISO "mandatory" endorsements actually mandatory?

ISO “mandatory” endorsements always cause significant confusion … to which you can add that there is often abundant miscommunication accompanying their release. When ISO labels a form as mandatory in a state, it doesn't mean that it is mandatory for every ISO member to use. Nor does it mean that it is mandated by law or regulation.

How is the carrier identified?

  • A few carriers that are ISO members are identified as "automatically following" ISO. If the endorsement is filed as mandatory by ISO, then the form would be mandatory for those carriers, and they are correct in stating they have to adopt the endorsement. According to the regulators, however, the number of carriers “automatically following ISO” is the exception rather than the rule.
  • Most ISO-member carriers are identified as not automatically following ISO, in which case they file with the regulator that:

1) they will be following the ISO filing, or

2) they will submit a different filing. The filing can be that they won't add the form, that they will add it with a different effective date, or that they will add it with amendments.

Ultimately, the nature of the form will likely dictate how important it is to your insured: Is it an addition of coverage? A reduction in coverage? A policy administration issue? Depending on the nature of the change, statutory or regulatory provisions could mandate specific disclosures. As a result, the carrier may have to provide notification to the insured in addition to the filing.

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If a customer never responds to a quote, should we confirm it’s no longer valid or rely on the expiration date?

Agencies handle many quote requests, and only a certain percentage will turn to policies or policy endorsements. Often, the decision will be made immediately with the customer in front of you or over the phone. On a number of occasions, however, the customer will receive the offer in the mail, or simply want some time before making a decision. When that is the case, it is tempting to rely exclusively on the expiration date on the quote. After all, once the date has passed, the quote is no longer valid, right? In principle, that is true, but when a claim occurs, customers may argue that they thought coverage was bound, or maybe that they agreed to the quote and were expecting the policy.

From a best practices standpoint, the general recommendation is to follow up with the prospect or policyholder to:

  • Confirm that you have not received any order following the quote
  • Confirm that coverage is not in place
  • Ask the prospect/policyholder to contact you immediately if this is not consistent with his understanding

As always, document your contacts with the individual. Ultimately, you want to remove any ambiguity as to where the customer stood on the offer and how he manifested his intent.

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Can we notify our homeowners' customers that we will add Identity Theft coverage to their policies and ask them to "opt out" if they don't want it?

No. The regulators in Delaware, Maryland and Pennsylvania have long viewed this as impermissible. Sometimes referred to as “negative automatic roll-on,” the gist of the practice is that customers are forced to monitor and opt out of offers in order not to be charged extra at renewal.

While as independent insurance agents, we often have strong feelings about some of the coverage choices made by our customers, the reality is that if we were on the receiving end of this kind of offer, we would likely react the same way they do, and view the offer as an attempt to force us to accept coverage that we just don’t want.

As the saying goes, “The road to hell is paved with good intentions.” While your goal is to protect customers whose coverage you view as lacking, from the regulators’ standpoint, it is an unfair trade practice. The coverage selection needs to be based on an opt-in mechanism. From a marketing standpoint, you need to rethink the offer so that your customers make the decision to add the coverage onto the policy, not to remove it. Will it be as effective? Probably not. Will you be less likely to explain yourself to the regulator and pay a fine? Absolutely.

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Are there any restrictions on what we can advertise on our website?

Yes and no. Here’s the reason: Web designers are there to make you look good. That’s what they’re paid to do, and there’s nothing wrong with that. However, between their zeal to paint you in the best light and their lack of knowledge of the industry, they may unwittingly weaken your E&O defense if a claim is filed against you. Why? The types of statements and promises made on some agencies’ websites can be used by plaintiffs’ attorneys to increase these agencies’ duty of care to their customers.

How it works:

  • An agent’s “basic” responsibility is to procure insurance in accordance with a client’s instructions.
  • When the agent claims he is highly skilled or an expert and the customer relies on that expertise, this set of facts can create “special circumstances” or a “special relationship.” So if your website is professing that you are “insurance experts,” “provide tailored coverage for each of your customers,” or “make sure that all your customers are properly covered,” your duty of care may now be higher than you think. Good rule of thumb: Do not overpromise!

This is not only true of your website; it also applies to other materials used to promote yourself to the general public (marketing brochures, ads, printed materials) and even verbal representations (e.g. “hold” messages on your phone system).  You should expect all these communications to be scrutinized by the plaintiff’s attorney in a lawsuit.

Other important notes when building a website:

  • Watch for misuse of a trademark, or use of copyrighted material without permission.
  • Watch for accuracy of the content: If it is developed in-house, make sure that someone proof-reads the material. Vet the source if you are using an outside content developer.
  • If you refer to other websites or vendors, request consent from the vendor, provide several options, and add a disclaimer relative to the services provided by the vendor.
  • Add disclaimers that restrict the geographical areas for which content is provided (e.g. list the states where you operate/are licensed). If a response is only valid for one state, say so.
  • If you make reference to your carriers in some of your advertising material, clear the advertising with the carrier. It’s often required in the agency contract.
  • If you collect personally identifiable information for quoting, secure the page collecting that information (see last month’s Ask Our Experts answer on the subject, and talk to your IT provider).
  • Include a Privacy Statement on your website (as required by federal and state law and regulation).
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What workflows should we implement when an employee leaves?

Whether an employee leaves employment with the agency or is simply away for a short or extended period of time, it’s important to establish and implement standard policies, procedures and workflows to address incoming email issues. From an E&O and customer service perspective, there are a couple of practical steps you can consider.

Option 1
Keep the former employee’s email account open for a specified period of time, during which time a customer (carrier, vendor, etc.) who sends an incoming email should receive an out-of-office reply. The out-of-office reply should include additional information, such as the contact information (name, phone number, email address) of the individual within the agency to whom the customer should direct his or her inquiries.

As part of this procedure, if your system has the capacity, emails should be automatically re-routed to the agency employee(s) assigned to handle the former employee’s work. In the alternative, the agency would need to implement procedures whereby the former employee’s email account is proactively monitored.

Option 2
Shut down the former employee’s email account completely, after which any customers sending an email to the former employee should receive an undeliverable notice. As with the option above, the undeliverable notice should include additional information, such as the contact information (name, phone number, email address) of the individual within the agency to whom the customer should direct his or her inquiries.

Following is a sample template for inclusion with either your out-of-office or undeliverable notice reply:

Thank you for emailing [former employee’s name] at [agency name]. [Former employee’s name] has left employment with [agency name]. You are directed to contact [insert name, phone number, email address of new contact person], or you may contact the agency at [insert primary phone number for the agency].

It’s also important to make sure outgoing emails include appropriate disclaimer language notifying recipients that coverage can’t be modified, or a claim submitted, via email, and that any requested changes will not be effective until confirmed by a licensed agent.

In conjunction with these options, it also would be prudent to communicate directly with affected customers via regular mail, advising them (1) that the agent is no longer employed with the agency; (2) as to whom within the agency the customer should contact if they need to discuss anything (to include an applicable phone number and email address); and (3) that emails should no longer be sent to the former employee’s email address.

Whatever practice you decide to implement, it’s never advisable to leave customers in a position where they believe someone within the agency has received, and is appropriately handling, their email request.

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Is an email disclaimer required by law?

While it’s prudent (from an E&O perspective) to include language on agency emails notifying recipients coverage can’t be modified, or a claim submitted, via email, use of such a disclaimer is not required by law.

If it’s not required by law, what are the benefits of using an email disclaimer? Some of the benefits include:

  • An email disclaimer puts your customer on notice that he or she can’t and shouldn’t rely on the fact they sent you an email requesting a coverage change, or notifying the agency of a claim, and expect that their request has or will be taken care of; and
  • Using an email disclaimer represents a risk management technique your agency can use to control or minimize E&O exposures associated with electronic communications, and should be utilized in conjunction with other related risk management techniques, including email filtering, use of anti-virus software, and implementing an agency-wide email policy.

Can you give an example of an email disclaimer? The following example contains commonly used email disclaimer language:

A coverage modification or claim submitted via email will not be considered reported until such time as our agency acknowledges receipt of the request/information, and confirms that the coverage modification has been processed or the claim has been submitted to the insurance company.

While use of an email disclaimer doesn’t represent a silver bullet against an E&O claim or dispute, it’s a simple measure to employ; represents one more line of defense; and comes at a very affordable cost – free.

Remember that it’s also prudent to include a confidentiality statement as part of your agency’s email message.

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Must we ask customers to sign off on their coverage declinations?

While we can’t speak for all states, at this time, Delaware, Maryland and Pennsylvania do not mandate to have customers sign off on coverage they have declined.

From an E&O standpoint, it is mostly a matter of offering the coverage and retaining a record or evidence that the offer was made. Agents sometimes like to see their customers commit to their declination with a signature. Others will simply annotate the file. A third option, which can be viewed as a compromise between a sign-off and a simple file annotation, is a confirmation email or letter to the customer. In it, you can reiterate the offer and the customer’s decision, as well as his option to contact you in the future if he changes his mind.

This method is generally more efficient, since it does not require having the person sign the document, something that can be difficult to do and time-consuming when the customer is not in the office and the agency tries to secure the signature by mail.

If this is a solution you’re considering, here is some more food for thought: Sending a quote along with the letter may be a good idea, for two main reasons:

  1. The cost of the added coverage may be less than what your customer imagines, and providing a price may actually increase your take-up rate; and
  2. When an issue arises, and a claim is denied, customers will sometimes argue that if they had known the price was so low, they “obviously” would have added the coverage, and that the agent should have pointed out the price difference. This is not to say that they will win the argument, but it can sometimes place the agent in an awkward position.

Note: Keep in mind that in some states, including Maryland, certain coverage notifications are required. Some carriers may ask their agents to secure a policyholder’s signature to acknowledge that he or she received notification. This is a separate issue.

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What information should be included in the Description of Operations box on the ACORD 25?

Great question. As you’re well aware, agents are often asked to add all kinds of information to certificates. It's generally recommended the information an agent enters in the Description of Operations box be limited as per the ACORD instructions to include recording "... information necessary to identify the operations, locations and vehicles for which the certificate was issued."

The ACORD 25 Instructions for the Description of Operations/Locations/Vehicles box provide as follows:

Enter text: The Certificate Of Liability Insurance general remarks. The additional comments or special conditions that may exist upon the policy. ACORD 101, Additional Remarks Schedule, may be attached if more space is required. As used here, records information necessary to identify the operations, locations and vehicles for which the certificate was issued.

As long as the information you include, or are being asked to include, in the Description of Operations box isn’t illegal (meaning that it’s not a violation of an insurance or other law, regulations, etc.), and the information you include is not a misrepresentation of any policy terms or conditions, inclusion of such information is not expressly prohibited.

As an added precaution, it may be prudent to include a statement thereafter that the information being provided is "to the extent provided in the attached/enclosed forms" and then provide copies of the applicable policy forms/endorsements. This will assist in limiting the agency's exposure, while also placing the onus on the certificate requester to determine whether or not coverage, etc., afforded by such documents/endorsements meets their requirements.

If the information you intend to reference/add to the certificate falls outside the four corners of the policy and/or applicable endorsements, you should refrain from including/adding it.

Read more on certificates of insurance

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Is an audio file attachment a sufficient substitute for a signed acknowledgement to reduce or delete coverage?

Many new phone systems allow an agency to receive emails with audio file attachments, which are attached easily to a client file -- and which beg the question of whether or not voice instruction is sufficient. Upon doing some research and bouncing this request off one of our E&O programs, here is our perspective:

As long as the availability, quality and “legibility” of the file are maintained throughout the life of the policy, the audio file should be a viable substitute for the signed acknowledgment. Legibility implies that any software upgrades should not prevent the ability to “read” prior versions.

The agency would need to retain the audio file until the insured's file is discarded. The agency will need to address whether this could create any storage issues. The convenience or feasibility may depend on how customer files are retained in the agency. For example, if the agency currently identifies the types of documents to retain in the system from year to year from the ones you keep longer, it would be essential to identify the audio file or email properly so that it is retained. If you keep everything for the life of the policy, this issue would be moot.

In all circumstances, you may want to identify/name these audio files clearly so that you know what they contain, are easy to retrieve, and as mentioned above, are not discarded too early.

Another option which can complement the filing of the audio file is to provide a confirmation letter (upon receipt of the request or when sending the amended policy). For example, you could attach a letter with the endorsement delivery that:

  • confirms the customer's request to delete, reduce or modify coverage, and
  • suggests the customer read the amended policy in detail and contact the agency if anything is not consistent with his request, if he changed his mind or has questions. This could be an additional piece of evidence if the customer challenges the change down the road.
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Should I provide a disclaimer when using market-value policies?

While market-value policies* are sometimes the only option available as the valuation basis for buildings, handling them with caution is a good call. In order to limit your E&O exposure associated with the limitation in coverage without extending your duty of care, here is a suggestion:

You could send the usual cover letter telling the insured to read the policy and let you know if he has any questions. This type of letter is fairly standard and a good reminder to customers that they are supposed to read their policies (even if most of them don’t). You could then add another paragraph along the lines of:

As we discussed, please note that this policy is written with a 'market value' endorsement which will not afford replacement cost coverage in the event that your dwelling is damaged in a loss. As always, please do not hesitate to contact us if you have any questions.

This will simply establish a record of your discussions with the policyholder and hopefully prevent any claim of misrepresentation that could ensue if the customer later fails to remember your conversations on the topic.

A word of caution: Being overly descriptive in your letter could increase your duty of care to your customers and beg the question of why a specific provision of the policy is highlighted instead of others. The use of a more standard letter, slightly modified to highlight something you already discussed with the customer, is meant to strike a balance between the two demands.

* A market-value policy would allow the loss settlement to be based on an assessed market value rather than Replacement Cost or even Actual Cash Value. In this case, we are dealing with an undesirable neighborhood where the market value is lower than both RC and ACV. The clause can be used in order to prevent a moral hazard.

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Can my producers sign applications and related documents on behalf of our insureds?

Some concepts seem like no-brainers … one of them being that an insurance producer should never, ever, sign an application (or any other insurance related document for that matter) on behalf of a customer. "What's all the fuss? It makes life easier for me and the customer,” you may say.

All the fuss is … that expensive claim you weren't expecting – the one that your customer just called to tell you about … those no-longer-valid limits your customer chose but you signed for … that no-longer-enforceable election to waive UM/UIM and stacking that you signed off on.

You can see where this is going – to court. You don't really want to go there, do you? 

Why all the worry?
Short of having a customer grant you Power of Attorney, verbal authorization from the customer for you to sign documents on his or her behalf is not sufficient. Never was. Likely never will be. After a loss occurs and a claim is filed, the customer may disavow having granted you authorization.

In such a case, the first thing a good attorney will do is ask the customer, “Is that your signature on the application?” As soon as the customer says “no,” the who, what, how and when as to why you – as the producer – signed the documents on the customer’s behalf becomes immaterial. It simply becomes extremely difficult to hold the customer responsible for the contents.

Are there other possible repercussions?
I’m glad you asked, because yes there likely are – and some serious ones at that – such as:

  • A likely E&O claim filed by the carrier against you and/or the agency
  • Possible suspension, revocation or non-renewal of your (resident and, perhaps, non-resident) license, fines, etc. because “forging” another person’s signature on insurance documents is an express violation of the state’s producer licensing act
  • Potential agency termination by the affected carrier due to agency agreement provisions related to committing fraudulent acts and violating state insurance laws or regulations
  • Possible criminal charges and the costs and stigma associating with defending them

The bottom line
Because you, as the producer, are not a party to your insured's contract of insurance, you should never, ever sign documents on a customer's behalf – even if they ask you to. If they ask why you can’t or won’t sign, just mention some of the above.

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How can we mitigate our website-related E&O exposures?

Great question! What information you include or don’t include on your website – as well as what steps you do or don’t take to protect customer data – can be used to support or strengthen an E&O claim against the agency. Statements or information you might consider innocent or benign can unintentionally increase the agency’s duty of care to its customers and prospects, which can be harmful to and weaken your E&O defense in a claim situation.

With that in mind, the following are some do’s and don’ts to consider when creating, updating or reviewing your agency’s website:


  • Accurately specify states in which the agency is licensed;
  • Clearly state that both misstatements or omissions of relevant information provided by current and prospective customers can result in price variations, or declinations or rescissions of coverage;
  • Clearly state that requesting coverage does not guarantee that coverage can or will be provided. Coverage can only be initiated/confirmed via a specific statement from a licensed member of the agency’s staff;
  • Clearly state that information requested in order to provide a quote or policy revision will not be shared without the applicant’s permission;
  • Clearly state via a disclaimer that information provided on the website is not a guarantee that insurance can or will be provided, or that the agency is obligated to procure insurance for website visitors;
  • Include a Privacy Statement, and encrypt any and all pages which collect personally identifiable information provided by a customer or prospect, including online quote forms;
  • Request and obtain written consent from carriers if you use their name and/or logo on your website.


  • State that the agency does things or provides services it doesn’t do or provide;
  • Include language that expressly states, or can be interpreted to suggest, that any claim will be fully covered;
  • Include language such as “exceptionally skilled,” “expert,” “specialist” or “partner” to describe the agency and/or its staff, or language such as “fully covered” or “guarantee” to describe the product;
  • Include language promising absolutes, such as “addressing all of your coverage needs,” “constantly reviewing” or “immediate response time”;
  • Utilize a quote mechanism, and then fail to respond in a timely manner;
  • Utilize open text boxes for customers and prospects to type messages, unless the information is adequately encrypted;
  • Launch a website without carefully reviewing its content. Many template agency websites or web designers likely won’t consider or be aware of E&O ramifications specific to an insurance agency. It might not hurt to also contact your E&O carrier and request their input as well.
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Is a “witness” signature required on an ACORD 35 form?

You likely have been there at one point or another: You spend time getting to know and quote a new prospect. The prospect elects to accept coverage from one of your carriers. The two of you complete an ACORD 35 and send it to the prospect’s former agent, who refuses to process the form, arguing the ACORD 35 isn’t valid because no one “witnessed” the document.

So, must the ACORD 35 be signed by a witness in order to be valid? The short answer is no. Most documents and contracts, including the ACORD 35, don’t require a witness signature to be valid and enforceable, even if the document – such as the ACORD 35 – includes a signature line for a witness. In addition, the official ACORD 35 instruction form simply states: “when this document is used as a Policy Release, an insured should [emphasis added] have a witness sign and date the form.”

The primary function of a having someone witness a signature is for evidentiary purposes – meaning, if necessary, the witness can corroborate later that they were physically present and actually saw the party sign the document. This is likely why the ACORD 35 instructions suggest the insured “should” have a witness sign and date the form.

Who can be a witness?
Though not required, if you decide to have the ACORD 35 signed by one or more witnesses, the witness(es) should:

  • Be at least 18 years of age
  • Be of sound mind – and not under the influence of drugs or alcohol
  • Not be a party to the document (e.g. the insureds)
  • Be physically present when the form is signed by the insured(s)

While an individual insured cannot witness his or her own signature, it is permissible for a producer to sign the cancellation request/policy release form as a witness. Just remember the producer would need to actually see the insured sign the form (meaning the producer shouldn’t send the form to the insured for signature via regular mail, email or fax, and then sign as a witness after the insured signs and returns the form).

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Are proposals an adequate substitute for a signed ACORD application?

A signed application is better, and here’s why:

  • Generally, company guidelines make reference to properly executed forms. That means the forms are signed by the parties. These “forms” are not just the executive officer exemption, terrorism, or auto forms. They include the underlying application where the applicant commits to responses made to specific questions. Your agency agreement also could expressly require you to secure signed applications, in which case failure to do so would place you in breach of contract.
  • From an E&O perspective, the best practice is to have a signed application on every risk, even if the application is signed after coverage is bound (simply show the date it is signed and place the app in the file). It is better than relying on a proposal. When doing so, the agency can still maintain a flexible workflow that accounts for time constraints. The agency can provide a quote based on a phone conversation, bind coverage when the price is accepted, and secure the signed application after the fact.

What are the risks of not having a signed app?
The big risks for the agency are misrepresentation – and any defense based on it. Absent a signed application, a carrier could be made to pay a claim, and then could seek reimbursement from the agent because the agent was unable to produce the signed app.

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What are best practices for handling a producer’s email account after he or she leaves an agency?

Whether an employee leaves employment with the agency (for retirement purposes or otherwise), or is simply away for a short or extended period of time, it’s important to establish and implement standard policies, procedures, and workflows to address incoming email issues. From both E&O and customer service perspectives, you’re right to be concerned; and yes, there are a couple of practical steps you can consider.

One option would be to keep the former employee’s email account open for a specified period of time, during which time a customer (carrier, vendor, etc.) who sends an incoming email should receive an out-of-office reply. The out-of-office reply should include additional information, such as the contact information (name, phone number, and email address) of the individual within the agency to whom the customer should direct his or her inquiries.

As part of this procedure, if your system has the capacity, emails should be automatically re-routed to the agency employee(s) assigned to handle the former employee’s work. Or the agency would need to implement procedures whereby the former employee’s email account is proactively monitored.

In the alternative, the agency could opt to shut down the former employee’s email account completely, after which any customers sending an email to the former employee should receive an undeliverable notice. As with the first option, the undeliverable notice should include additional information, such as the contact information (name, phone number, and email address) of the individual within the agency to whom the customer should direct his or her inquiries.

Following is a sample template for inclusion with either your out-of-office or undeliverable notice reply:

Thank you for emailing [former employee’s name] at [agency name]. [Former employee’s name] has left employment with [agency name]. You are directed to contact [insert name, phone number, and email address of new contact person], or you may contact the agency at [insert primary phone number for the agency].

It’s also important to make sure outgoing emails include appropriate disclaimer language notifying recipients that coverage can’t be modified, or a claim submitted, via email, and that any requested changes will not be effective until confirmed by a licensed agent.

In conjunction with these options, it would also be prudent to communicate directly with affected customers via regular mail, advising them (1) that the agent is no longer employed with the agency; (2) as to whom within the agency the customer should contact if they need to discuss anything (to include an applicable phone number and email address); and (3) that emails should no longer be sent to the former employee’s email address.

Whatever practice you decide to implement, it’s never advisable to leave customers in a position where they believe someone within the agency has received, and is appropriately handling, their email request.

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How should I respond to lenders’ demands that I include “replacement cost” in the remarks section of ACORD 27?

Great question. As you’re well aware, agents often are asked to include all kinds of information on the Evidence of Property Insurance form. It's generally recommended that the information an agent enters in the remarks box be limited as per the ACORD 27 instructions guide.

The ACORD 27 Instructions for the “REMARKS (Including Special Conditions)” box provide as follows:

Enter text: The additional comments or special conditions that may exist upon the policy. ACORD 101, Additional Remarks Schedule, may be attached if more space is required.

As long as the information you include, or are being asked to include, in the remarks box isn’t illegal (meaning that it’s not a violation of an insurance or other law, regulations, etc.), and the information you include is not a misrepresentation of any policy terms or conditions, inclusion of such information is not expressly prohibited.

To assist in limiting the agency’s exposure – and as an added precaution if you do include information in the remarks section – it may be prudent to include a statement thereafter that the information being provided is "to the extent provided in the attached/enclosed forms" and then provide copies of the applicable policy forms/endorsements. Given policy language may differ from carrier to carrier and the possible issues associated with co-insurance penalties, etc., simply typing a generic phrase such as “replacement cost” on the form, with nothing more, could be ambiguous in context and subject to interpretation.

As a rule of thumb, if the information you intend or are requested to add to the remarks section falls outside the four corners of the policy and/or applicable endorsements, you should refrain from including/adding it.

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Employee Management

Can an employee currently in a clerical position get licensed? He mentioned a prior felony conviction...

It depends. But most importantly, depending on the type of felony conviction, your employee could be in trouble for working in your agency, even in a clerical function, and so could you!

The Violent Crimes Control and Law Enforcement Act (VCCLEA) is a federal law which prohibits anyone who was convicted of a felony for dishonesty or breach of trust from working in insurance without securing prior written consent from the state's insurance regulatory authority. It also prohibits anyone from willfully employing such an individual in insurance without ensuring that such consent was granted.

Technically, you already both could be in violation of the law. The penalties are severe, both criminal and civil, for the employee and for the employer, including hefty fines and imprisonment. There is no time limit either.

At this time, the first thing you need to do is talk to the individual and explain the legal requirements.

  • If the felony conviction is one that could fall within the scope of "dishonesty or breach of trust," the Insurance Department should be contacted immediately and an application for written consent secured.
  • The consent form is sometimes referred to as a "1033 waiver," after the applicable section of the US Code (18 USC 1033).
  • Until consent has been secured, the person should not work for the agency.
  • If the felony has no chance of being categorized as indicated above, you are in much better shape.

We have a comprehensive, turn-key resource available online (see link below). If you are not familiar with the VCCLEA, read the Q&A and learn more about the requirement and practical ways to comply.

Note: Relying on the word "willfully" to attempt to be exonerated is not recommended. Agency principals are expected to exercise due diligence. It is the nature and the extent of the due diligence that will come under scrutiny if a violation is found. If you choose not to ask questions so as not to hear the answers, trouble may still come your way.

The VCCLEA is the reason behind all the background checks conducted by carriers on their appointed agents. Agencies should do the same with their staff, licensed or not. It will demonstrate due diligence, and it is also a good business practice.

Access VCCLEA resources

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Must I conduct a background check on every employee in the agency?

Not directly, but indirectly, yes.

The Violent Crimes Control and Law Enforcement Act of 1994 (VCCLEA) specifies that individuals convicted of a felony involving dishonesty or breach of trust may not work in the insurance industry without first obtaining written permission to do so from the state Insurance Department. In addition, insurance agencies and companies may not “willfully” allow such individuals to work in the insurance industry. (For a complete list of crimes, review 18 U.S.C. § 1033.)

Since insurance companies and agencies are prohibited from allowing those convicted of the above-listed crimes to work in the insurance industry, they may need to conduct criminal background investigations of employees. Relying on the wording “willfully permits the participation” and choosing a “don’t ask, don’t tell” strategy is not the way to go about this as it might be interpreted as the employer’s willful permission to violate the law.

Agencies should have a formal policy in place to make sure that none of their employees are working in the agency without proper authorization. Your formal policy may involve a systematic criminal background check for your current employees as well as your new hires, full-time and part-time alike. Whatever the case may be, the procedure must be applied consistently.

Naturally, agents should be cautious that the third party used to provide any services is reputable and will be compliant with the Fair Credit Reporting Act (FCRA). Agents should also make sure that they themselves comply with the FCRA and other federal and state employment laws, including anti-discrimination laws. As an example, bear in mind that you need to secure the individual’s consent before conducting a criminal background check.

Other noteworthy items:

  • The VCCLEA contains a few gray areas, generally around the types of crimes that qualify as “dishonesty or breach of trust.” However, a good vendor can help decide how to cast the background-check net in order to reach your goal without breaking the bank;
  • A “hit” is not a complete ban from working in insurance, but a requirement to secure consent from the regulator, and this consent is granted to a number of individuals every year;
  • New local laws and ordinances may affect how to conduct the background check. A growing number of municipalities and counties have adopted “ban the box” policies, which preclude a potential employer from asking criminal-background questions before a first interview has taken place (that means no questions on the job application!);
  • In order to show due diligence, a proper procedure should be applied consistently; 
  • Remember that a procedure normally should include your current employees as well … something that we know can be sensitive for staff who have been working for the agency for many years.

Whatever you choose to do, it should clearly show that due diligence was applied. Something to bear in mind when you review your agency’s employment processes.

Access our complete suite of resources (includes a sample authorization form, a sample announcement explaining the process to staff, a sample strategy to review the background checks, and more) 

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Are employers required to pay employees for time taken off for jury duty?

As both employers and employees know, jury duty escapes no one. However, whether or not you are required to pay workers’ regular wages while they’re on jury duty depends.

Non-exempt employees under the Fair Labor Standards Act (FLSA) and the laws of Delaware, Maryland and Pennsylvania:
While approximately eight states have laws which require an employer to pay all or a portion of an employee’s regular wages when an employee serves on jury duty, neither the FLSA nor our three states’ laws require employers to pay non-exempt employees for any time off from work which is taken in order to fulfill that employee’s jury duty obligation.

However, while there may be no requirement to pay an employee for responding to a jury summons or serving on a jury, federal and state laws prohibit employers from discharging, threatening to discharge, penalizing, threatening or otherwise coercing an employee because of the employee’s jury duty.

When do you have to pay an employee for jury duty?
If an employee is exempt under the Fair Labor Standards Act (FLSA) and he or she is required to report for jury duty, employers are prohibited from making any deductions in pay during any week in which the employee performs any work.

For example, if the employee reports to jury duty for three or four days during the week, or performs a couple hours’ worth of work several days during that week, the employee would be entitled to be paid his or her full salary for that week. If, however, that exempt employee reports for jury duty for an entire week, and performs no work during the week for the employer, the employer is not required to pay the exempt employee for the week. 

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Do licensed employees qualify for the Learned Professional exemption under the FLSA?

Unfortunately, just because your employees are licensed, learned and professional doesn’t mean they qualify for the Learned Professional exemption.

Under the Fair Labor Standards Act (FLSA), most employees must be paid at least the federal minimum wage and be paid overtime (at the rate of one and one-half times the employee’s regular rate of pay) for all hours worked in excess of 40 hours per workweek.

However, much like an insurance policy, the FLSA contains exemptions (exclusions) to the overtime rule for certain types of workers. One is the Learned Professional exemption – an exemption that the U.S. Department of Labor has expressly stated "... does not apply to occupations in which most employees acquire their skill by experience rather than by advanced specialized intellectual instruction" (e.g. individuals working within an insurance agency).

Qualifications for the exemption
In addition to the minimum salary, the Learned Professional exemption requires the employee to meet certain tests, dealing with their primary duty and field of advanced knowledge.

Based on the FLSA, case law, and opinions rendered by the U.S. Department of Labor, use of the Learned Professional exemption is generally limited to doctors, lawyers, pharmacists, dentists, engineers, scientists, teachers and accountants, to name a few.

Beyond the Learned Professional exemption, there are Administrative and Executive exemptions. Qualification depends on salary basis, salary level and applicable duties.

What it means for you
Since misclassification is a common reason for lawsuits against employers, it’s important to take employee classification for FLSA purposes seriously. Employers who maintain a laissez-faire attitude regarding exempt/nonexempt classification of employees could find themselves burdened with liability for up to three years of unpaid back-pay for overtime wages, plus interest, statutory penalties and attorney’s fees.

Access a more comprehensive overview of the FLSA

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What should I know about implementing alcohol, drug and substance abuse policies?

The use and abuse of alcohol and drugs, whether illegal, prescription or over-the-counter, can create a myriad of problems: diminished job performance and productivity, absenteeism, tardiness, unforeseen damages, increased medical and workers' compensation bills, and issues with other employees within the agency.

Addressing such a delicate issue can involve everyone from staff and carriers, to customers and prospects. Then there are your own interests as an employer, business owner and licensee in a highly regulated industry.

Initial steps
First and foremost, it’s incumbent to specifically define your alcohol, drug and substance-abuse policies and procedures in an employee handbook. It should include provisions which:

  • Provide that possession, distribution, sale, transfer, use or working under the influence of alcohol or controlled substances in the workplace, while on duty or while operating agency owned vehicles or equipment, is prohibited;
  • Define what the agency considers to be prohibited substances;
  • Clearly state consequences associated with being at work under the influence, e.g., discipline, including suspension and termination;
  • State whether or not, and under what circumstances, an employee may be subject to testing for drug and alcohol use, and the possible repercussions of a positive result;
  • Explain that the agency reserves the right to conduct reasonable searches on the agency’s premises; and
  • Establish that the agency recognizes that medical authorities view alcoholism and drug addiction as an illness (this issue is discussed below in the context of federal laws), and that the agency won’t impose discipline on any employee solely because he or she has admitted a problem.

Your handbook should also encourage employees to seek professional help should they feel they have a problem, as well as inform them that the agency will work with them in order to assist with meeting objectives.

Applicable laws
There are primarily two federal statutes which may provide possible workplace protections for either an alcoholic or addicted employee: the Family Medical Leave Act (FMLA) and the Americans with Disabilities Act (ADA). These statutes may be applicable because alcoholism and drug addiction can be considered a disease or disability. As a result, the FMLA and/or ADA may preclude the termination of an “at will” employee under certain circumstances. In addition, the statutes provide, in part, that employers make reasonable accommodations, most often by allowing an employee to take leave to enter into and complete a rehabilitation program.

Should an employee successfully complete rehabilitation, federal statutes don’t require employers to indefinitely tolerate relapses or refusals from an employee to seek and obtain help. In addition, the statutes don’t necessarily protect employees who possess or use alcohol or drugs while on duty, or whose abuse prevents them from performing their job duties.

Bottom line
Get your employee handbook in order, and enforce applicable provisions. Appropriately document any concerns and/or incidents which occur. Consult an HR professional if you’re uncertain how to proceed should an incident arise.

How can IA&B assist?
Our HR Solution© includes a customizable Associate Handbook and complimentary consultation services from the HR professionals at Mosteller & Associates. Or to relieve your agency of handbook-preparation duties, we offer an affordable alternative via our Independent Agency Solutions services. 

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How many policies should a CSR handle?

In short, it depends. There is data available to benchmark agencies, and this information can be extremely useful in assessing your agency’s performance in a number of different areas. The data varies by agency revenue size and/or by line of business, making it more difficult to give a blanket answer.

A Commercial Lines CSR will generally not be expected to manage as many accounts as a Personal Lines CSR. Also, if your agency specializes in a type of risk that requires more individual attention, this should have an impact on the number of policies handled by staff.

Finally, note that when agency productivity is measured as a percentage of book serviced, it is often expressed in premium dollars rather than policy count.

Best sources for this kind of information
It is important to review these numbers on a regular basis, in order to identify trends and/or changes in the agency (particularly if you’re contemplating or asked to hire new staff to handle the workload), and getting a clear picture may require cross-referencing several sources. Some of the publications or tools you can use to compare your agency with others include:

  • The Best Practices Study is an annual study filled with invaluable data. It touches upon many aspects of an agency: from the average revenue managed by staff, to the average dollar amount spent on marketing, new commissions produced by Commercial Lines producers, compensation, number of carriers represented, and many, many more. It also provides this information for the top performing agencies. I cannot stress enough how rich this study is. A link to the study is available at
  • The Producer Profile, the CSR Profile, as well as the Growth & Performance Standards, are all published by the National Alliance Research Academy.
  • MarshBerry will also occasionally publish compensation or productivity data

Some examples:

  • According to the CSR Profile (2011 edition*) a Personal Lines CSR handles an average of 526 accounts (with a median at 347), a new business servicing volume of $127,000 and a renewal business servicing volume of $700,000. A Commercial Lines CSR handles an average of 219 accounts (with a median at 120), a new business servicing volume of $390,000 and a renewal business servicing volume of $2,527,000.
  • The 2017 Best Practices Study provides an average line of business revenue per staff (including both Sales and Service) between $206,196 and $247,514 for Personal Lines depending on the revenue size of the agency. For Commercial Lines, the average varies between $242,000 and $387,000 depending on agency size.

Consult multiple sources
When some of the sources come from surveys, the law of large numbers may not always be met, which could make the data less reliable. By reviewing the results from different sources, and not using only raw numbers but percentages as well, you may be able to eliminate some outlier information, even out the results and obtain a clearer picture for your agency. Finally, let’s state the obvious – when benchmarking your agency, use the same comparison points (the Best Practices Study includes an appendix that spells out what criteria were included in the calculations, making it easier for you to calculate results for your own agency).

Learn more about benchmarking

* Release of the 2018 edition of the CSR Profile is expected during the summer of 2018.

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Should a change of employer be reported to the Department of Insurance?

Indirectly, yes. Every producer has his or her employer information on file with the state regulator. While there is no direct requirement to report a change of employer, the statute requires that a producer’s change of address be reported to the regulator. In Delaware, Maryland and Pennsylvania, the timeframe to report a change of address is 30 days.

All three state regulators have interpreted the statute to extend to the business address, not just the mailing or residential address. While absent a separate action, the chance of enforcement is likely slim (particularly since most producers will update the information when they renew their license), it is prudent to proceed with the notification within the 30 days allotted. In addition, since many producers choose their employer’s address as their mailing address, they would not receive any communications from the Department of Insurance (unless the mail is forwarded by their former employer).

How to proceed?
The simplest way is probably to use the National Insurance Producer Registry at, Address Change Request feature. There should be no charge for this service.

The information contained in this resource is current as of the date published.  
Published date: 06/27/11
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I have been asked for my National Producer Number: Do I have one, and where do I access it?

What it is - The National Producer Number, or NPN, is a unique number that is assigned to every licensed producer in the country. This includes individuals and some business entities (agencies).

It was developed and is used by the National Insurance Producer Registry (NIPR) as a single identifier for the national Producer Database (PDB). Initially created to avoid privacy issues by circumventing the use of Social Security Numbers, the NPN has the great advantage of immediately identifying a person, even if that person holds licenses in multiple states. The NPN is automatically assigned to the Producer as soon as they are added to the Producer Database (PDB).

Some state insurance regulators (e.g. Delaware) now use the NPN to assign CE credits. It is anticipated that all states will eventually do away with their own state license numbers.

How to find yours - The National Producer Number (NPN) can be easily located by going to the National Insurance Producer Registry’s website at and selecting the “National Producer Number (NPN) Access” link in the left-hand side “Products & Services” menu. From there, the NPN can be retrieved by typing in the Social Security Number and last name OR the resident license number and home state. For an agency NPN, the FEIN number can be used.

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I am getting married next week. How do I change my name on my producer license? Should I wait for renewal?

You should not wait for the license renewal. Many producers may not realize that they need to notify the insurance regulator within a certain timeframe, and that timeframe is dictated by state law or regulation. Keep in mind that a change of name could also occur for an agency license and would be subject to the same procedure. In our three states, the requirements are as follows.


Proof of the name change along with a $10 fee needs to be submitted within 30 days of the name change. The basis is found under § 1707 of the licensing law.


Changes to a license are addressed under § 10-117 of the Insurance Article, which provides that a producer has 30 days to notify the Maryland Insurance Administration (MIA) of a change. In practice, licensed producers can submit a Producer Licensing Service Request Form to the MIA and include a copy of a marriage certificate, divorce decree or court order. The form can be faxed to 410-468-2399.


A licensed producer must notify the Pennsylvania Insurance Department within 10 days of the name change and attach appropriate documentation. The requirement is addressed in § 37.81 of the regulation.

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Why do I need to report an "administrative action" to all states where I hold a non-resident license?

Yes, you must report it. Here’s why:

Duty to report – Under most producer licensing statutes (and certainly under the Delaware, Maryland and Pennsylvania statutes), producers are required to notify the regulator of any administrative action taken against them in another state. In our three states, the timeframe to report misconduct is 30 days. Failure to come forward and notify the regulator will generally lead to a new violation of the producer licensing law for “failure to report misconduct.” Don’t expect this one to fall through the cracks: The regulator will find out through a national database (see below).

Note that failure to report misconduct:

  • Is one of the most common producer licensing violations
  • Is one of the easiest to enforce by the states
  • Includes the duty to report criminal charges in addition to administrative actions

How do state regulators gain access to the information? As mentioned above, whether you independently report them or not, administrative actions are fed into the Regulatory Information Retrieval System (RIRS), a database created by the National Association of Insurance Commissioners (NAIC) and listing actions taken by regulators against insurance producers. The database is accessible to all state regulators. However:

  • The fact that states now have the ability to use RIRS to access information promptly and easily does not exonerate producers from their duty to report as dictated by law.
  • The extent of the information available via RIRS may not be sufficient for the other states to fully appreciate the nature of the “indiscretion” that occurred, and how significant it was, or if it would have been an indiscretion at all in their jurisdiction.

Can producers get a copy of the report? Yes, they can. The producer report is treated as a consumer report under the Fair Credit Reporting Act, and as such, you are eligible to request and receive a report annually, free of charge. By ordering and reviewing a copy of your report, you can ensure that it doesn’t contain any errors and that the information is accurate and up-to-date. To request your report, simply go to the National Insurance Producer Registry (NIPR) website, scroll down to “Request a copy of my personal PDB report,” and mail or email the completed form to the NIPR.

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How can I access a copy of my producer license(s) ASAP?

Fortunately, whether you need a copy of your resident license, or any (or all) of your non-resident licenses, there’s a “one-stop shop” available.

Where do I go, and how do I proceed?
The simplest avenue to access and print your license(s) is to go to the National Insurance Producer Registry website, which is commonly referred to as NIPR.

To access and print your Pennsylvania license:

  • Go to
  • Under the “How to” subheading, click on “Print your License….”
  • On the Producer Licensing Map, click on Pennsylvania.
  • You will be redirected to a Pennsylvania Insurance Department (PID) webpage, where you should follow the very simple instructions.

You will need to have your Pennsylvania producer license number available in order to access and print your license. There is no charge associated with this service.

To access and print your Delaware or Maryland license:

  • Go to
  • Under the “How to” subheading, click on “Print your license….”
  • On the Producer Licensing Map, click on either Delaware or Maryland, from which you will be redirected to the State Based Systems website.
  • Enter the applicable information under the subheading “License Search.”

You will need to have either your National Producer Number or your Delaware or Maryland producer license number available in order to access and print your license.

For Delaware and Maryland, you can access and print a free copy of your license in conjunction with any of the following: (1) original license approval; (2) renewal approval; (3) name and/or address change; and (4) adding and/or deleting a line of authority. If you haven’t experienced any of these circumstances which make you eligible to print a free copy, you will need to register for either Delaware or Maryland’s Online Licensee Services, and pay a fee from $2.95 to $5.95.

If you wish to access and print a copy of a producer license for states other than Delaware, Maryland or Pennsylvania, simply choose the applicable state on the NIPR Producer Licensing Map referenced above, after which you will be directed accordingly.

After accessing my licenses(s), will I be able to save a copy to my computer?
Yes, you will, and it’s recommended that you do so. (It could save you some time in the future, and perhaps a couple of dollars as well).

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How do I secure a non-resident license in another state?

Before answering this question, bear in mind that the passage of NARAB II by Congress in 2015 is expected to streamline the licensing procedures across the nation and reduce or eliminate many of the remaining issues mentioned below. There has been some delay in the nomination of the NARAB Board, but we’re hopeful that its eventual launch will help agents across the country.

Until then, the answer to the question really depends on the state for which you are seeking a license. While some uniformity was obtained through the enactment of new producer licensing laws in the aftermath of the Gramm-Leach-Bliley Act, some discrepancies still exist. So if you want a license, here are some tips:

Let's say you are located in Maryland and you need a non-resident license in Michigan. There are several points to consider:

Exemption: If you are trying to get a non-resident license because one of your commercial clients is expanding in another state, first check for the applicability of the non-resident commercial multi-state exposure exemption: If you are going to insure the Michigan property on the existing Maryland policy, you may not need a non-resident license. The need for a license depends on the state, on the type of policy and on how the out-of-state risk is covered.

Rules: If the exemption is not applicable in your case, go to the National Insurance Producer Registry's (NIPR) website at The site provides a "state matrix of business rules" with a checklist of what is needed in that state to apply for an individual and/or a business entity license.

Remember that you need to license every individual producer who will sell, solicit or negotiate in that state (that includes all technical discussions with the customers), plus the agency if the state requires the agency to be licensed as a business entity (most do at this time).

Registration: As indicated above, some discrepancies exist between the states, and these discrepancies have often been exacerbated by the Departments of State creating additional burdens for producers. The difficulties stem from the business entity license usually required by the Department of Insurance of the non-resident state. Often, the issuance of a business entity license is conditioned upon registration of the business with the Department of State. In order to register, the Secretary of State will require a "registered agent" in the non-resident state, meaning an address in that state. Most agents do not have an address to provide and need to enroll the services of companies specializing in such services, a.k.a. a registered agent. You guessed it: Everybody charges a fee along the way, and the non-resident license becomes a more expensive proposition. Not all states have those requirements, but it is important that you be aware of them so that you may be proactive and not see your license application delayed by discovering these procedures as you go.

Learn more

This Ask Our Experts answer was provided in May 2016. Note that the information is time-sensitive. 

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Is there an age that a licensed producer becomes exempt from CE requirements?

While the statutes and regulations governing CE requirements vary for our three states, the good news is that each state provides at least some degree of exemption or credit for the seasoned producer. The available exemptions/credits follow.

Delaware –
General requirement: Resident licensees are required to complete 24 credit hours during each 24-month licensing period.

Exemption – credit: A licensee who has been continuously licensed for 25 years or longer prior to the start of their licensing period, or who holds an approved professional designation, shall receive an automatic 12 credits in each biennium.

Of note: The 12 automatic credits cannot be applied to fulfill any applicable flood (2 hours), ethics (3 hours) or long-term care (3 hours) CE requirement.

Applicable statutes/regulations: 18 DE Admin. Code 504, at Section 8.0 – Licensee’s Responsibility

General requirement: Licensees are required to complete 24 credit hours during each 24-month licensing period.

Exemption – credit: If a licensee has held a license for 25 or more consecutive years as of Oct. 1, 2008, the licensee shall only be required to complete 8 hours of CE in each renewal period.

Of note: If you qualify for the above exemption, you’re still required to meet the flood (2 hours), ethics (3 hours) and long-term care (2 hours) CE mandates, if applicable.

“Grandfathering” exemption: In addition, per MIA Producer Bulletin 13-07, licensees who were age 70 or older as of April 30, 2013, are exempt from the general CE requirements.

Of note: If you qualify for the “grandfathering” exemption, you’re still required to meet the flood (2 hours) and long-term care (2 hours) CE requirements, if applicable.

Applicable statutes/regulations: MD Ins. Code Section 10-116; Code of Maryland Regulations (COMAR) Section; Maryland Insurance Administration Producer Bulletin 13-07

Pennsylvania –
General requirement: Licensees are required to complete 24 credit hours during each 24-month licensing period.

“Grandfathering” exemption: A licensee who was licensed prior to Jan. 1, 1971, and who has been continuously licensed for all lines of authority since that time, is exempt from CE requirements.

Of note: If the licensee adds a line of authority, the exemption becomes inapplicable.

Applicable statutes/regulations: 40 P.S. Section 310.8

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Does a DUI conviction prohibit someone from obtaining an insurance producer license?

Great question, and one which comes across our desks somewhat regularly. The Violent Crimes Control and Law Enforcement Act (VCCLEA) is a federal law which prohibits anyone who’s been convicted of a felony for dishonesty or breach of trust from working in insurance – without first securing written consent from the state’s insurance department. This is probably the law which gave you pause.

The VCCLEA also prohibits you, as an employer, from willfully employing someone who has been convicted of a felony for dishonesty or breach of trust without ensuring such consent was obtained. In addition to the VCCLEA, each state’s producer licensing statute addresses eligibility and suitability of applicants, and it lists prohibited acts which may preclude licensure.

While your prospect’s DUI was classified as a misdemeanor offense, a DUI can be classified as a felony if the drunk driver:

  • Causes serious injury or death to someone,
  • Is arrested with a high blood alcohol content, or
  • Has multiple convictions.

Fortunately for you and your prospect, neither the VCCLEA nor the state’s producer licensing statutes contain provisions or criteria which appear to exclude eligibility for licensing simply because he has a misdemeanor DUI on his record.

Remember: A prospective licensee should never intentionally misrepresent or conceal a material fact in the application for a license. Besides the fact that you’d have a dishonest employee in the fold, the department of insurance will run applicable background checks. Failing to include the DUI could demonstrate dishonesty and untrustworthiness on the part of the prospect. Such acts are prohibited under the producer licensing statute and could preclude licensure. Bottom line – always tell the truth.

If you or the prospect has any questions, contact the licensing bureau of your respective state’s insurance department:

Delaware:         (302) 674-7390 or
Maryland:         (410) 468-2411 or
Pennsylvania:    (717) 787-3840 or 

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How can I do business under a different name for my agency?

You need to make sure the name is properly associated with your business. It stands to reason that any business operating under various names should be “traceable.” If a consumer complains about an entity, regulators and the Attorney General’s office must be able to locate that business.

As a result, whenever a business that is registered under a specific “legal name” (e.g. John Doe Insurance, LLC) wants to use a different or an additional name (e.g. Forward Thinking Insurance), it can do so. However, the agency must file that additional name with the state(s) where it operates.

That additional name is referred to as a fictitious name. The proper process generally includes registering the fictitious name with both:

  • the state agency managing business registrations (Secretary of State in Pennsylvania, Department of Assessments and Taxation in Maryland, and Prothonotary’s Office in Delaware), and
  • the insurance regulator.

A fictitious name is also known as an assumed name, “trading as” name (T/A), or “doing business as” name (DBA), since it is a business name that differs from the name that is officially registered for your business (LLC, S-Corp, C-Corp, or partnership). If you are a sole proprietor and want to use a fictitious name, you will also have to register it.

The good news: It’s easy!
While each state generally will have slightly different procedures, it is actually quite simple to file a fictitious name. On our website, you can find the applicable process and relevant links for each of the three states. In the end, make sure you keep documentation that you filed the registration.

The Pennsylvania Insurance Department (in particular) has clearly indicated that they would not issue any specific document. Since the fictitious name is not displayed on the license, you will have no evidence that you registered the name. They suggest asking for confirmation in writing that the Department received the request for the fictitious name registration.

In 2017, one of the top violations identified by the Pennsylvania Insurance Department was failure to register the use of a fictitious name, … so this issue definitely needs attention.

Access our full guidance on agency licensing

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Strategic Planning

Can an agency’s buyer ask to be an additional insured on the seller’s E&O tail coverage?

It is unusual, but not unheard of, to have a purchaser request to be added as an additional insured on the Extended Reporting Period (ERP) endorsement. You can ask your E&O carrier, but the reality is that the carrier will probably deny the request.

We all know that when you sell a business that was insured with a claims-made policy, you need to purchase an ERP endorsement or “tail” for whatever amount of time you feel is sufficient. The ERP itself is defined as “a designated time period after a claims-made policy has expired during which a claim may be made and coverage triggered as if the claim had been made during the policy period.”

The tail will provide coverage by giving you more time to report a claim that is made after you sold the agency for a wrongful incident that occurred before you sold the agency. Nothing new here!

The buyer’s request cannot be satisfied because the buyer has no insurable interest in the policies prior to the purchase.

  • Before the purchase, the seller’s E&O carrier will pick up issues relative to any negligent handling of the accounts that occurred prior to the date of purchase:
    • Through the regular E&O policy for all claims made/reported before the date of purchase
    • Through the seller’s ERP for all claims made/reported after the date of purchase but before the ERP’s expiration date.
  • After the purchase, the buyer’s own E&O carrier will pick up issues relative to any negligent handling of the accounts that occurred after to the date of purchase.

In order to avoid being in breach of contract, this means that you should be cautious not to agree in the purchase agreement to provide Additional Insured status that you will not be able to secure. Check with your E&O carrier before you sign!

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A carrier wants us to have an agency disaster plan. Where should I begin?

IA&B has a template you can use. We refer to it as the emergency and business continuity planning manual (EPM for short). It is designed to help you 1) gather, organize and store critical information you’ll need in case an emergency arises, and 2) evaluate your agency’s response options ahead of time. This can save you considerable time and money (not to mention clients) if a natural catastrophe or other disaster should strike your area. On the input side, you answer questions and enter agency information; on the output side, the agency’s customized EPM is created based on your responses and then is available online.

The major highlights of the EPM are that:

  • It is a web-based tool, so it’s accessible anytime, anywhere (if you need to relocate your office during an emergency, you will be able to access it with your username and password);
  • Everything is in one place: agency principals who have lived through a disaster all agree that retrieving information is a terrible hindrance to operations, particularly when you also have to deal with your own customers’ claims. By organizing key information and having it at your fingertips, you can more easily launch alternate processes that allow you to continue to service your customers and operate your business;
  • Pre-defining employee roles eliminates the stress of having to do research and make decisions on the fly and under intense pressure. Key information is available, and roles and responsibilities are assigned ahead of time.

Some tips to remember:

  • You can delegate this project to a trusted employee. If necessary, put the plan on a multi-week schedule to allow the person some time to collect and input all of the information
  • Due to the sensitive nature of some of the information gathered, only those individuals identified with us as either the primary or the alternate contact in the IA&B database access to the tool. (Contact us know if that’s an issue.)
  • The EPM is a living and breathing document. Things change in an agency: You may open a new bank account, add a carrier appointment, lose a staff member, buy equipment, select a new accounting firm … you get the gist. Once completed, you should update your emergency plan no less than once a year. Put it on your calendar!

Access the emergency planning manual

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Meet Our Experts

IA&B Vice President - Advocacy Claire Pantaloni, CIC, CISR

800-998-9644, ext. 604

Email Claire

IA&B Legal & Corporate Affairs Director Don Bankus

800-998-9644, ext. 603

Email Don