A significant and important aspect of an insurance agency involves the providing of professional assistance when and if their customers sustain a loss. The manner in which agencies handle this “claims handling” responsibility is extremely important and has shown to cause E&O claims if mishandled.
Some of the issues involve the following:
Denying a claim
There have definitely been E&O claims as a result of an agency person denying a customer claim without sending it to the carrier. They were totally convinced that the claim was not covered. Unfortunately, they were wrong and if the claim would have been submitted, coverage would have responded. Bottom line, even if the agency person is positive that the claim is not covered, it should still be sent into the carrier for them to make this important decision. Agents should not be denying claims.
Providing advise to a customer to not file a claim
Be extremely careful not to advise a customer whether or not to file a claim. While you can and probably should advise them of the issues, at the end of the day, the decision is theirs.
Other coverage that might apply
When a customer suffers a loss or faces some legal action for their potential liability, the agency should review the entire customer file to determine other policies that might provide some coverage for the specific loss. A common issue deals with a bodily injury claim and the customer has an umbrella. When the claim is reported to the GL or auto carrier, strong consideration should be given to also putting the umbrella carrier on notice. While the agency may not believe that the claim has the potential to penetrate the underlying coverage and thus go into the umbrella layer, these types of scenarios do occur.
Professional management of the claim
Your customers are relying on your agency to professionally manage their claims. Delays in the processing could cause your customer some hardships or could result in adverse positions by the carrier.