Insurance Community University 1 Insurance Proposals and Submissions The webinar will begin...

Insurance Community University www.InsuranceCommunityUniversity.com1

Insurance Proposals and Submissions

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Welcome to your Insurance Community University

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Test YOUR Knowledge

• After class you will link to a Quizflash on today’s topic in your follow up email

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DisclaimerInsurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions;

and state jurisdiction. This instructional material provided by Insight Insurance Consulting and the Insurance Community

Center is intended as a general guideline and any interpretations provided by Insight, Insurance Community or presenters do not modify or revise insurance policy language. When ISO language is included in the materials, all ISO content is protected by the ISO copyright. All parties to this presentation and creation of

materials assume neither liability nor responsibility to any person or business with respect to any loss that is alleged to be

caused directly or indirectly as a result of the instructional materials provided.

Copyright 2010 – 2013 All Rights Reservedwww.insurancecommunitycenter.com

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Proposals and Submissions

Your Presenters Today

Casey Roberts, CIC, AFIS, ACSRPresident, Laurus Insurance Consultingwww.laurusinsuranceconsulting.comcasey@laurusinsuranceconsulting.com

http://www.laurusinsuranceconsulting.com/




What This Course Will Cover

• Submissions—The Basics• The Process

• Account Review—Identifying Exposures

• Applications/Marketing• Proposals • Issuance of Policy and Review

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Polling Question #1

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Submissions The BasicsStandard of Care

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Based on Regulations

To the Insurance Customer

To the Insurance Company


Basics of Standard of CareBased on Regulations• Compliance with such issues as GLBA, Privacy Acts,

authority as an agent/broker

To the Insurance Company• That the submission qualifies for the insurance carrier• That you are honest and accurate

To the Insurance Customer• Ordinary care to obtain the coverages they have requested

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Standard of Care and Submissions• The submission for insurance is the

culmination of several steps in a process– Acquiring the customer– Identifying exposures to risk that can be

transferred to insurance– Gathering all the necessary information to

provide the appropriate insurance AND to understand the transfers of risk the insured has assumed OR transferred

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The ProcessAccount Review

Identifying Exposures


Account Size May Dictate Process

• Whether small or large premium, all deserve and expect a certain level care, due diligence and service

• Agent/broker may differentiate based on size of account: small, mid, large– This will differ by agency/brokerage– Procedure manual should specify procedures– All staff should follow

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Polling Question #2

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Account Size May Dictate Process

SmallLimited Marketing

EligibilityApplicationCover Letter

Mid SizeAccount Review

Coverage AnalysisMarketing

ProposalCoverage Summary

Supporting Documents

LargeMore DetailedMore OptionsMore Policies

Risk SurveyIndependent

Inspections, etc

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The Case Of The “Small Account”• The insured had a small woodworking

shop insured with an agent as a “single shot account” (No supporting business)

• The account was an accommodation because the agency handled the son’s account which was a sizable premium

• The agent spent a lot of time with the son, reviewing values, going over the renewals

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The Case Of The “Small Account”• With the woodworking account the

agent just kept renewing it year after year “as is” for THIRTY YEARS

• The woodworker burned to the ground• The policy had been issued on a basic

fire form without any inflation guard• Result???????

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http://www.google.com/imgres?imgurl=http://www.fridaypuppy.com/wp-content/uploads/2010/02/woodworking1.jpg&imgrefurl=http://www.fridaypuppy.com/index.php/2010/02/17/make-your-own-shit-or-at-least-buy-from-someone-who-did/&usg=__yFHFJ77wKmYZC31kdo3vP6eVl2Y=&h=300&w=300&sz=17&hl=en&start=2&um=1&itbs=1&tbnid=lupCQRfHoFJiPM:&tbnh=116&tbnw=116&prev=/images?q=woodworking&um=1&hl=en&sa=N&tbs=isch:1


Basic Account Review

Who, What, Where

Locations / OperationsGross Sales/Payroll

Current InsuranceMissing Coverages

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Larger Account Review

Survey Risk ExposuresCoverage Checklists

LocationsOperations

Gross Sales/Payroll

Flow Charts Of All Facets

Of Operations

Web Search and

Review

Review of all

supporting contracts

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Survey Risk Exposures & Coverage Checklists • Physical Inspection

– A Must– Many carriers require for large or small– Survey checklist– Take experts with you

• Coverage Checklists– By line– Exposure based

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Survey Risk Exposures & Coverage Checklists • Coverage Checklist and

Recommendations– To reduce oversight – Organized approach

• The Insurance University has a library of coverage checklists for its university members

• Today, we will be using the Proposal Checklist

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Polling Question #3

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Locations/Operations-Flow Charts• Graphically view account’s

operations• Assists in identifying:

– Geographic exposures• Property / Liability• Product / Services• Employees

– Dependency on other businesses– Shipping

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Flow Chart Of All Facets Of The Operation• Locations• Operations• Employees• Manufacturing bottlenecks

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http://www.google.com/imgres?imgurl=http://insidetradellc.com/wp-content/uploads/2009/09/alternative-fx-investment-risk-futures.jpg&imgrefurl=http://insidetradellc.com/blog/understanding-risk-vs-reward-in-alternative-investments/&usg=__kJUV-zWCxc2VG0Ff9ZRhAWjzT9s=&h=346&w=347&sz=107&hl=en&start=24&um=1&itbs=1&tbnid=TBx6v2VHRxYV8M:&tbnh=120&tbnw=120&prev=/images?q=identify+risk&start=20&um=1&hl=en&sa=N&gbv=2&ndsp=20&tbs=isch:1


Operations Flow Chart Sample

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SuppliesSuppliers

ContributorsSub-Contractors

Sub-manufacturers

DomesticForeign

Method of TransitTruck / RailShip / Air

Party Responsible For Damage

Type of OperationManufacture

SellBuild

Recipients of Products or

Services

Contract Review


Relationship with other Entities--Suppliers

Supplier

Heilind

RTD

Parts Supplied

Electric Switches

Motors & Hydraulics

Location

Indiana

China

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Relations with Customers

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Pistons

Seals/Glands

Piping 10% of Sales

30% of Sales

48% of Sales Arizona

Puerto Rico

England

http://images.google.com/imgres?imgurl=http://www.mccullochs.com.au/userfiles/Image/Manufacturing-logo_03.gif&imgrefurl=http://www.mccullochs.com.au/manufacturing.php?id=2&usg=__ZDykTxdKBCLil2PoQCmd-o7UOPc=&h=142&w=193&sz=5&hl=en&start=20&itbs=1&tbnid=UJkEmHwnvmWXQM:&tbnh=76&tbnw=103&prev=/images?q=manufacturing+logo&hl=en&gbv=2&tbs=isch:1

http://images.google.com/imgres?imgurl=http://www.newcastle-homes.co.nz/houseimages/20081013143246_Ables%20Manufacturing%20Logo.jpg&imgrefurl=http://www.newcastle-homes.co.nz/feature.php&usg=__EmFryS78O9G40qSRSxR5Ya7sAUc=&h=254&w=412&sz=55&hl=en&start=12&itbs=1&tbnid=7lA_R-t3RKJ_wM:&tbnh=77&tbnw=125&prev=/images?q=manufacturing+logo&hl=en&gbv=2&tbs=isch:1

http://images.google.com/imgres?imgurl=http://www.ppsa.org/images/page/full/Castell%20Logo%203x2.jpg&imgrefurl=http://www.ppsa.org/content/vendorpage&usg=__w2ckDf8B-pSRfdG4BRPP-7luSVI=&h=467&w=700&sz=132&hl=en&start=15&itbs=1&tbnid=N-7oE1aWVP3clM:&tbnh=93&tbnw=140&prev=/images?q=manufacturing+logo&hl=en&gbv=2&tbs=isch:1


Basis of Structuring Coverage

• Client information and risk assessment• Document review

– Vendor agreements– Contracts– Leases

• Availability of coverage• Premium

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Polling Question #4

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Applications


Applications and Marketing

Complete the application to various insurance carriers• Many are sent in incomplete

Obtain quotations

Choose the right company based on coverages; stability of the insurer and pricing

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Polling Question #5

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You have submitted applications for your insured’s to ten insurance companies. Five companies declined and one company’s quotation was significantly less expensive than the other companies. What is the correct method of advising the insured of your marketing results.


Application & Marketing • First to represented / admitted carriers• Know your market place

– Who are the specialists– What will they accept and not accept

• Size• Type

• Know your company policy forms• Know the rules—underwriting manuals

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Application & Marketing

• Prepare Executive Summary– Synopsis of account for Underwriter– Outline submission attachments, projected

premium and need by date

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Market the Account

Know Your Market

Maintain Declinations

Show Companies on

Proposal

Show Ratings of the Companies

Create the marketing file

AMSFollow Up

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Producer / AMMarketing Manager


Declinations

• In writing• Communicate in writing to insured

– Coverage summary– Separate document– Retain

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Additional Submission Items

• Supplemental applications (as required)• Financials• Statement of Values (SOV)

– Signed and dated by insured

• BI Worksheet– Completed, signed and dated by insured

• Advertising examples – hard copy, website

• Leases as required

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Proposals


Proposal Purpose and Format

Standardize the ProcessTemplate Used By All Signature from Customer

CoveragesIdentifies Coverage Lines Terms and Conditions

Written CommunicationNew Business Renewal

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Proposals

• Accurate and complete• Use disclaimers

Proposal communicates insurance companies and coverages

Customer must sign the proposal

Changes to proposal must be initialed

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Polling Question #6

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Polling Question #7

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Initial Coverage Changes

Resubmit to quoting insurance companies

Obtain new coverage options and cost

Communicate coverage changes and cost to the customer

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Customer Authorization

Obtain permission to bind coverage in writing from the

insured

Issues binder OR obtain the policy number from the

insurance carrier and issue an evidence of insurance

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After Coverage is Bound or Authorized• Order coverage• If binding and replacing coverage – start

cancellation process• Suspense for receipt of policy• Review policy when received • Verify coverage matches EXACTLY what

was requested and ordered

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Proposals

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See Proposal Checklist


Issuance of the PolicyChecking and Double

Checking


Finalize Placement

Corrections

• In writing to company

Bind

• Agency issues

• Company Issues

Follow Up

• Review policy

• Additional Corrections

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A Word to the “Wise” on Binders


Binders

• A binder is a temporary contract with a maximum and minimum term determined by state law or underwriting instructions

• Confers full extensions of rights, duties and privileges under the insurance contract being bound

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Binders• A binder must have the elements of CATS:

– Complete in all respects, both with what is covered and what is not

– Accurate in all respects– Timely with respect to inception and expiration

date of binder and with respect to jurisdictional limitations on length of binder

– Signed by someone with the authority to do so

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Best Practices of Binder Issuance• Know binding authority granted by the

insurance company• Obtain binder from E & S broker• Binding maximum 60 days• Issue a binder on new business• Issue a binder on renewal business

when the policy has not been received

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Best Practices of Binder Issuance

When possible – insurance company u/w issue

• If not – confirmation in writing that agent binding is authorized

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Best Practices of Binder Issuance

Agency issue

• Signed by licensed authorized (by contract) resident or non-resident agent for the state(s) where coverage is provided must sign the form.

• The agency must be licensed in all states where coverage is bound

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If the Account Is Not Written

• Send a thank you letter to the company underwriter whose quote was not accepted

• Send a thank you letter to the company underwriter who does not wish to quote– Good relationship building

• If unable to quote send a letter documenting same to the client

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Proposal

Application

Binder

Policy

Summary

Certificates

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Match

Did ALL of these items match and issued correctly?


Policy Review

• Some clients don’t want to take the time – do your best to insist on proper review time

• Restrictions and limiting endorsements and coverage language– Be aware and educated– Learn how to communicate these issues to

the insurance buyer

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Key Issues to Review on Policy Checking • Correct effective / expiration dates • Name Insured correct

– First Named insured– All other entities included or written

separately– Inactive entities included

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Key Issues to Review on Policy Checking • Locations• Limits / Deductibles• Endorsements as requested• Endorsements added by company• Limiting language• Warranties• Edition dates match proposal and quote

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Polling Question #8

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Standard of Care and Submissions

• Deliver or mail (email) the • Include a summary of coverages if that is

your procedure• Include a letter with the delivery that asks

the insured to read their policy and state that the policy provisions supersede all prior documents pertaining to this submission including but not limited to the proposal

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Summaries of Insurance


Polling Question #9

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Summaries of Insurance• Summaries “summarize” coverages that

have been issued. They supersede the proposal.

• The summary should also indicate that the policies supersede any binders previously issued and that those documents are now null and void

• Note any differences between requested and issued coverages

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Summaries of Insurance• Explain any special exclusions or

limitations contained in the policy received

• There must be disclaimer language on the summary indicating that it does not change any of the terms or conditions of the policy as issued.

• Customer should sign and date the summary / policy receipt

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Sample Summary Disclaimer Language

The purpose of this summary is to recap the insurance program that has been issued for the agency. This summary should be used for reference purposes only as this summary in no way changes nor interprets the terms and conditions of the policy issued.

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Summary

• Identify, quantify exposures• Establish coverage requirements• Confirm with customer• Ask for coverage correctly• Verify that you received what you

asked for• Document the process and the

results

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Upcoming ClassesUpcoming University/Paid CE Classes

FREE to University Members$50.00/charge for non university members

7/18 OCIP/CCIP

7/24 and 25 Errors and Omissions

7/30 Personal Auto Policy Problems & Solutions

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Upcoming Community Classes FREE to University Members$25.00/charge for non university members

7/16 New Commercial Property Form (1 hr CE)

Join the University TODAY. www.insurancecommunitycenter.comClick Join University at the top of the bar

http://www.insurancecommunitycenter.com/

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