Insurance Proposals and Submissions The webinar will begin shortly. There is no audio at this time. This presentation is being recorded for your viewing pleasure at a future date. The attendance and proctor forms are available under ‘Materials’ in the Webinar’s Console to the right. The PowerPoint presentation is also available under ‘Materials’. You will receive the course number for your state near the end of class. Use the ‘chat’ window for questions on the content. 100% Participation in Polling Questions is required to receive credit for this class. Even if you do not intend to receive credit, please participate in the polls.

Welcome to your Insurance Community University Audio All of you are currently on mute Un-mute your own system Telephone Option Select Telephone on your screen Dial in the PIN number so that your number becomes active Microphone and/or Speaker Option You can use this option if you have a headset that you use with your computer 2 2

Participation & Chat Window You will receive information from the monitor via the ‘Chat’ window.  Please locate window in the control panel Q & A is welcomed during the presentation and at the end of the presentation You will find the question box on your control panel Write your question in that box and send it to the presenter/organizer The presenter will take those questions in the order submitted 3 3

DOI Requirements When you see a slide with the hand up symbol, touch the “hand” icon on your control panel Click ONCE only If you do not raise your hand, the monitor will be in contact with you in the chat box  If you are in a group, the designated proctor is responsible to make certain you are all in attendance at all times = Hand is down 4 4

Polling Throughout the class we will be conducting periodic polls We need 100% participation on the polls The polls are intended to check participation but also to create discussion topics throughout the presentation 5 5

Forms To Complete for CE After class ends Return attendance form Proctors – return your form to email address Email address is in chat window or in email sent to you today 6 6

DOI Requirements We will file your hours with the DOI after the completion of this webinar and we have received the attendance form. You have 48 hours to return the form You will be sent a Certificate of Attendance/Completion by email.  Please retain this for your records for five years. 7 7

Internet Disruption If the presenter looses internet connection STAY ON THE LINE The administrators will communicate with you

Internet Failure If the internet fails and all participants are kicked off line by Go To Training or other source then the seminar will be terminated You will receive instructions by email as to how we will proceed This is a precautionary notice, only

This class is being recorded Available in the University Recorded classes do NOT qualify for CE

Disclaimer Insurance forms and endorsements vary based on insurance company; changes in edition dates; regulations; court decisions; and state jurisdiction. This instructional materials provided by Insight is intended as a general guideline and any interpretations provided by the instructor or the creator(s) of this material do not modify or revise insurance policy language. In providing these materials, the authors 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 2014 All Rights Reserved www.insurancecommunitycenter.com

Your Instructor Today Marjorie L. Segale, AFIS, CISC, RPLU, CIC, CRIS, ACSR, CISR Vice President, Insurance Community Center, President, Segale Consulting, LLC

What This Course Will Cover Submissions—The Basics The Process Account Review—Identifying Exposures Applications/Marketing Proposals Issuance of Policy and Review

Polling Question #1 Question #1 Do you offer either an Excess or Umbrella policy to every client? Yes No Sometimes

Submissions The Basics Standard of Care Based on Regulations To the Insurance Customer To the Insurance Company

Basics of Standard of Care Based 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

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

Identifying Exposures The Process Account 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

Polling Question #2 Question #1 Do you offer either an Excess or Umbrella policy to every client? Yes No Sometimes

Account Size May Dictate Process Small Limited Marketing Eligibility Application Cover Letter Mid Size Account Review Coverage Analysis Marketing Proposal Coverage Summary Supporting Documents Large More Detailed More Options More Policies Risk Survey Independent Inspections, etc

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

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???????

Basic Account Review Who, What, Where Locations / Operations Gross Sales/Payroll Current Insurance Missing Coverages Named Insured

Larger Account Review Flow Charts Of All Facets Of Operations Survey Risk Exposures Coverage Checklists Locations Operations Gross Sales/Payroll Flow Charts Of All Facets Of Operations Web Search and Review Review of all supporting contracts Named Insured

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

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

Polling Question #3 Question #1 Do you offer either an Excess or Umbrella policy to every client? Yes No Sometimes

Locations/Operations-Flow Charts Graphically view account’s operations Assists in identifying: Geographic exposures Property / Liability Product / Services Employees Dependency on other businesses Shipping Business Income / Dependent / Extra- Expense / Foreign Was called contingent business interruption - old term and still used in foreign forms

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

Operations Flow Chart Sample Type of Operation Manufacture Sell Build Party Responsible For Damage Domestic Foreign Supplies Suppliers Contributors Sub-Contractors Sub-manufacturers Method of Transit Truck / Rail Ship / Air Recipients of Products or Services Contract Review

Relationship with other Entities--Suppliers Heilind RTD Parts Supplied Electric Switches Motors & Hydraulics Location Indiana China

Relations with Customers Pistons Seals/Glands Piping 10% of Sales 30% of Sales 48% of Sales Arizona Puerto Rico England

Basis of Structuring Coverage Client information and risk assessment Document review Vendor agreements Contracts Leases Availability of coverage Premium

Polling Question #4 Question #1 Do you offer either an Excess or Umbrella policy to every client? Yes No Sometimes

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

Polling Question #5 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. Question #1 Do you offer either an Excess or Umbrella policy to every client? Yes No Sometimes

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

Application & Marketing Prepare Executive Summary Synopsis of account for Underwriter Outline submission attachments, projected premium and need by date

Market the Account Producer / AM Marketing Manager Know Your Market Maintain Declinations Show Companies on Proposal Show Ratings of the Companies Create the marketing file AMS Follow Up

Declinations In writing Communicate in writing to insured Coverage summary Separate document Retain

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 Statement of values not signed and DATED by client. Worse yet having the producer signing. If no signature then confirmed back to client. Don’t see signed BI worksheet and worse yet producers sign the worksheets Do you have a method for getting financials – Trade secret/ confidentiality statement/ only actively to markets for bid/ Can send to underwriter direct. If you don’t understand lease CHECKLIST. Don’t be practicing law without a license.

Proposals

Proposal Purpose and Format Standardize the Process Template Used By All Signature from Customer Coverages Identifies Coverage Lines Terms and Conditions Written Communication New Business Renewal

Proposals Customer must sign the proposal Accurate and complete Use disclaimers Proposal communicates insurance companies and coverages Customer must sign the proposal Changes to proposal must be initialed

Polling Question #6 Question #1 Do you offer either an Excess or Umbrella policy to every client? Yes No Sometimes

Polling Question #7 Question #1 Do you offer either an Excess or Umbrella policy to every client? Yes No Sometimes

Initial Coverage Changes Resubmit to quoting insurance companies Obtain new coverage options and cost Communicate coverage changes and cost to the customer

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

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

See Proposal Checklist Proposals See Proposal Checklist

Checking and Double Checking Issuance of the Policy Checking and Double Checking

Finalize Placement Bind Corrections Follow Up In writing to company Agency issues Company Issues Follow Up Review policy Additional Corrections Don’t make insurance purchasing assumptions for clients.

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

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

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

Best Practices of Binder Issuance When possible – insurance company u/w issue If not – confirmation in writing that agent binding is authorized

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

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 Official Kiss Off Letter

Did ALL of these items match and issued correctly? Proposal Application Binder Policy Summary Certificates Match

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

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 The review and delivery of the policy(ies) and endorsements should occur within 30 days of receipt. Often there are multiple policies being issued for an insured by different insurance companies. Even though these policies may have common expiration dates, they may not all be received at the same time. The best practice is to deliver the policies to the insured once they have been checked by the producer rather than maintain original contracts in file waiting to deliver them all together. While this may cause extra work on the part of the producer, the sooner that the policy is delivered to the insured the sooner they have the ability to review the terms and conditions of their contract.

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 The review and delivery of the policy(ies) and endorsements should occur within 30 days of receipt. Often there are multiple policies being issued for an insured by different insurance companies. Even though these policies may have common expiration dates, they may not all be received at the same time. The best practice is to deliver the policies to the insured once they have been checked by the producer rather than maintain original contracts in file waiting to deliver them all together. While this may cause extra work on the part of the producer, the sooner that the policy is delivered to the insured the sooner they have the ability to review the terms and conditions of their contract.

Polling Question #8 Question #1 Do you offer either an Excess or Umbrella policy to every client? Yes No Sometimes

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

Summaries of Insurance

Polling Question #9 Question #1 Do you offer either an Excess or Umbrella policy to every client? Yes No Sometimes

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

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

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.

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

Upcoming Classes 4/24 Insight on Crime Insurance 4/29 Property Valuation California 5/1 Personal Toys and Unusual Exposures 5/6 Real Estate Leases COPYRIGHT 2009 INSURANCE SKILLS CENTER, INC.