How important is that missing information on the insurance application?

 

I agree that filling out applications is a pain.   With limited time to get an account quoted and written, having to do additional applications or supplemental applications puts a crimp on time.  So what are we to do?

 

A couple of thoughts or ideas:

 

  • I always assume there will be a supplemental application for most accounts. Contractors = Contractor supplemental (+ACORDS), Hospitality risks = restaurant bar and tavern supplemental (+ ACORDs). Special events = Complete special event application.  Most professional liability risks = Main form E&O app + supplemental based on type of risk (unless we are talking about engineers, accountants, lawyers or insurance agents).  I try to find a complete one that will encompass all the questions that are on carrier specific applications so I only have to get one application completed.
  • Unanswered questions – While you may think the particular question might not have any significance on the particular risk you are working on, many carriers see those as red flags. A number of carriers who have automated rating cannot skip questions and it puts them at a standstill until they get the question answered.  There are times where the answer to the question will be a deciding factor on IF the carrier can quote or if they will decline, so you sit at the precipice and don’t know which way it will go until answered.  There are carriers whose rating system allows you to mark the answer “unknown” and make it a “subject to” item.  This leaves you a long list of subject to items and the answers to these questions can change pricing or make the risk a decline.
  • Don’t know the answer? – Research it. There is so much information available on line now that 75-80% of the information is available if you just look for it.  Don’t know the protection class for a city?  Google it.  What construction is the building?   Bring up an image online and figure it out. Lots of available information in public property records.  By the way, you might want to Google the name of the business and see what comes up.    Many times lawsuits will show, bankruptcy or collection proceedings, etc. and wouldn’t you want to know about it before your underwriter does the same thing and asks you about it?
  • Know the rating factors. A recent application I received, didn’t list the protection class.  Think that affects the rating?  SURE!  Kind of like handing a set of keys to someone to test drive a car and one of the four wheels of off.  For a contractor account, this might include listing payroll, gross receipts, and number of employees and cost of subcontracted risk.  There is a wide range of premium basis that carriers now use and you should provide them all.
  • Completeness allows your underwriter (carrier or wholesale broker) to do their best and most efficient work. I can tell you my favorite agents to work with because of how meticulous they are on applications and how few a times I ever have to go back to them for additional information.  They allow me to do my best work.
  • Do you know what is “material” on an application? By this I mean, if something is left off an application, an account is quoted and written and the missing information later becomes and “issue” on a claim do you want to deal with the carrier’s allegation that this was a “material misrepresentation” and they are going for policy voidance?  I have seen it happen and it is something to lose sleep over.  I am amazed how many applications do not have the loss history or don’t have the box marked “no losses” checked.  Think prior losses on an account are important to the underwriter?  I know many times a prospect may not have their loss runs on hand and you are just trying to get a quote. How about asking them about losses, let them know that the carrier will most likely need verification of prior loss history (you can show them how to get loss runs) and if they ssay “no losses”, why not get them to sign a “no known loss statement”?  This shows a carrier that the prospect is willing to attest to the loss history and gives them more confidence.
  • Perspective – why not take more of a view that you might have to produce your “work product” (applications and underwriting information such as a narrative) in court. If you look at providing just enough information to get a “ballpark” estimate of premium are you doing a service for your prospect? The account has only been quoted and NOT underwritten.  Kind of like a doctor just asking you if you feel well today and not doing a physical exam.  Doing a consistent and complete job will make you look much better for that one time things don’t happen the way you wanted and you end up in court.
  • Top of the stack. Wouldn’t it be nice to be the one whose submission is moved to the top of the stack and handles promptly? 

 

I go back to one of the most valuable lessons I learned from my predecessor, take care of the details.  We are non-lawyers selling contracts.  We sell future promises of a carrier to pay losses in return for a small premium.  He said the details can come back and haunt you.  This was never truer than when you have an uncovered loss.  One in particular that I remember was alarming until I laid out the file and saw that we were perfectly documented.  Once we responded to the situation and showed the documentation, the situation went away because the attorney KNEW it was a dead end.  This allows you to sit back in your chair and breathe, knowing you took care of the details and did it right!

Ken KukralKenneth Kukral, CIC – VP of Special Risks – That means, call me if you need help on placing a unique, difficult, large or more complex risk. Kennethkukral@intlxs.com  800-937-3497 ext 2079

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