June 9
E&O: “Voss” Decision Raises the Bar for Agents
With Sandy claims looming over the heads of many Long Island and New Jersey agents, carriers and residents, the New York State Court of Appeals has heightened insurance brokers’ liability to their clients for the possible failure to recommend sufficient, proper coverage for their property. The upshot of what is now termed “the Voss decision” may be far-reaching for agents and brokers and their errors and omissions insurers.
The Decision…
The primary question before us is in this insurance dispute is whether a special relationship existed between the insureds and their insurance broker. Under the circumstances of this case, we conclude that the broker failed to meet its burden justifying summary judgment and [*2]dismissal of the complaint is not warranted.
Capital Ideas
The real changes however are coming at the top of the food chain. New money sources are changing the expectations and the outlook for insurance itself. The Casualty and Actuarial society sounded off on this, stating that “reinsurers and the entire property/casualty industry need to evolve as waves of capital reshape their business model.”
Regulatory Paranoia
It started over a year ago, in a speech before a prestigious conference on the state of the U.S. and world economies, when New York’s Superintendent of Financial Services first raised the warning signs against private equity firms “becoming active in the acquisition of insurance companies” because “these private equity firms are more short-term focused – when [insurance] is a business that’s all about the long haul.” Since issuing this warning shot, the issue of hedge funds and private equity firms investing in the insurance business has become a topic of significant discussion and some action.
Certificates of Insurance in the News Again
Certificates of insurance are a sore point with both those who ask for them and those who have to provide them. On the one hand, the requests sometimes ask for the impossible and the other, the certificates often don’t enable the certificate-holder to detect serious gaps in coverage. … Agent associations and others have been fighting the first part of the problem by pushing for state administrative or legislative action to make it illegal to ask for expansion of coverage via a certificate of insurance. Risk managers have been pushing for more information on what coverage is provided by the policies underlying the certificate of insurance. There are new developments on both fronts.
No One Wants a Satisfied Customer!
Whenever I speak with an agency, one of the first questions that I ask them is “What makes you different than the agency across the street?” and guess what I immediately hear almost every time: “Our customer service is the best, and our customers are all satisfied!” Well, that’s great, as I am sure that your customers are very “satisfied”, but is purely being satisfied going to keep them renewing with you every year, and more importantly are they going to tell a friend about your firm? Most likely not… so what do you need to do in order to make this happen?
PIA-endorsed Floodbroker.com Now Offered to PIA Members
“The errors-and-omissions exposure created by not offering a particular coverage haunts every agent. It is a well-established fact that following a hurricane, not offering flood insurance to your clients is a leading cause of E&O claims,” Spindelman says. “Groundless or not, E&O claims are real and have a detrimental effect on all parties concerned. The highhazard zoned properties will be far more likely to have some form of flood insurance due to bank insistence. While Floodbroker.com rates many high-hazard flood risk properties (even those that require elevation certificates), the program serves a significant market segment of property owners who are not obliged by a bank to buy flood coverage as well.”
Are We Our Own Worst Enemy?
The sad part is the agency I referred them to didn’t check back after the fact to see how their experience went and so they have no idea that their new clients have started out on the wrong foot. … The issues and less than satisfactory experiences were all things that should not have occurred in the agency. It involved failing to provide exactly the kind of personalized, quality service that is the hallmark of doing business with an independent insurance agent. Is it any wonder after experiencing less than adequate service why it is so easy for our competitors to sell price as the only determinant in deciding where you buy insurance.
Four Factors That Will Grow Your Agency
I personally feel that every agency needs at least one social media because I have witnessed significant growth from the day I hired my first social media engineer, due in large part to the way society and technology has progressed. Agency owners simply lack the time to manage all of the social media outlets, so that’s where the social media engineer comes in. I often hear agency owners say that they cannot afford a social media engineer, but what I say to that is: you can’t afford NOT to have a social media engineer!
