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Practical Risk Management in an Insurance Agency

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Place Coverage with a Solvent and Licensed Insurer. Legal ... Passing a state licensing exam and maintaining a license is a minimum requirement of all agents ... – PowerPoint PPT presentation

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Title: Practical Risk Management in an Insurance Agency


1
Practical Risk Management in an Insurance Agency
  • Northeast Asia Economic Forum
  • China Life Insurance Company
  • Hong Kong, China
  • February 13-15, 2006
  • Janet Mason and Gary Lee

2
Risk Factors in Insurance Agencies
  • Nature of Relationship with Insurers
  • Number of Years in Business
  • Types of Insurers Represented
  • Mix of Coverage Written
  • Scope of Services Provided
  • Association Memberships/Designations
  • In-house Loss Control Program

3
Insurance Agents Legal Duties to Insureds
  • Review a Customers Insurance Needs
  • Procure Coverage
  • Provide Customer Service
  • Place Coverage with a Solvent and Licensed
    Insurer

4
Legal Duties of Insurance Agents to Insurers
  • General Standards of Conduct
  • Duty to Communicate Information
  • (Sometimes) Duties as an Underwriter

5
Sources of Claims Against Insurance Agents
  • Claims Made by Clients
  • Failure to place coverage promptly
  • Failure to recommend needed coverage
  • Inadvertent cancellation/failure to renew
  • Clerical error or misunderstanding
  • Claims from Insurers
  • Failure to follow underwriting
    guidelines/exceeding authority
  • Failure to disclose material information
  • Failure to act in the best interests of the
    insurer

6
Education- the First Step
  • Actions of insurance agents, companies actuaries
    (and others) can result in allegations that their
    services caused economic loss.
  • Passing a state licensing exam and maintaining a
    license is a minimum requirement of all agents
  • For life and health agents technical study
    leading to the professional designations of
    Chartered Life Underwriter (CLU) consists of ten
    examinations, plus at least three years
    experience.
  • The designations are sponsored by

7
An Agency Loss Control Program Can Include
  • Established office procedures
  • Adequate staffing and periodic training
  • Automation systems
  • Exposure Checklists
  • Regular Review of Insurers Solvency
  • Systematic Intervention to prevent recurrence of
    past claims
  • Contracts with non-employee producers

8
Additional Loss Control Techniques
  • Require customer to sign and date applications.
  • Review all policies before delivery to customer.
  • Maintain duplicate diary systems for renewals.
  • Document the customers request for coverage.
  • Document/record important verbal understandings.
  • Sell higher limits, sell different types of
    coverage.
  • Subscribe to and read insurance professional
    journals.
  • Communicate promptly with clients when coverage
    cannot be bound or is limited by endorsement.
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