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What Not to Say After a Natural Disaster

September 12, 2018
12:00 PM

Welcome to the Atlantic hurricane season – breeding ground for wicked weather and, in turn, seemingly innocuous agency missteps that can trigger a flood of E&O claims. Here we share words of wisdom from Curt Pearsall, CPCU, AIAF, CPIA, consultant and national expert on errors and omissions for insurance agencies.

Now that hurricane season is upon us, there is a greater likelihood that a more significant number of your agency’s customers will suffer a loss of some type…. When calls start coming in, give tremendous care and attention to how agency staff responds. A variety of scenarios can occur when a client calls to report a claim, including:

SCENARIO 1
There appears to be coverage for the loss.
While agency staff may feel certain that the claim is covered, they should exercise caution when commenting. Why? Technically, the agency does not have the authority to approve or verify coverage; that is a carrier duty.

A response such as the following is suggested: “While I am cautiously optimistic that this claim is covered, I do not have the authority to make coverage determinations. That is the role of the carrier. I will report the claim and advise you as soon as I hear anything further.”

SCENARIO 2
The loss does not appear to be covered.
A denial of a claim also is not within the authority of the agency. These claims should be reported, and the carrier must make that determination. (Certainly there have been claims that technically were not covered, but the carrier decided to honor the claim.)

SCENARIO 3
The agency staff member feels “responsible” for the claim not being covered.
Imagine a client who has suffered a loss and is in dire straits. The agency staff may clearly see that if the agency had recommended some specific coverage, the loss probably would have been covered. The staff may respond with a statement like, “What you are reporting is a flood claim. How did we not offer you a flood proposal?”

Remember: The agency does not make the buying decisions for the client; that is the client’s responsibility. This clearly borders on an admission of liability – not something you want to do.

BOTTOM LINE
How the agency responds to these types of scenarios has significant potential to be a key element in the litigation process if the matter rises to the level of an E&O claim.

Oftentimes, during a hurricane event, numerous staff are asked to take on the responsibility of taking claims from customers. This is a common time where problems occur. Suggestion: Develop a document detailing the “do’s and don’ts” of taking customer claims, and then discuss this issue in sufficient detail to educate everyone who may be involved in the taking of those customer claims.