FIELD MARKETINGFIELD MARKETING AVOIDING AGENT LITIGATION Session 35: February 28, 2006 Session Producer: Stephen Serfass, Associate Drinker, Biddle & Reath, LLC

FIELD MARKETINGFIELD MARKETING LITIGATION RISKS FACING LTCI PRODUCERS Stephen A. Serfass Kristin M. Heine Drinker Biddle & Reath LLP

FIELD MARKETINGFIELD MARKETING 3 OUR GREEK CHORUS

FIELD MARKETINGFIELD MARKETING 4 Gail Holubinka, Vice President, Business Development, MedAmerica Insurance Company Nancy Morith, President, NP Morith, Inc. Alisa Murphy, Director of Process Development and Audit, CNA

FIELD MARKETINGFIELD MARKETING 5 Rate Increase Communications You are the front line – what you say matters. Be clear. Be correct. “I don’t know” is an acceptable answer.

FIELD MARKETINGFIELD MARKETING 6 Issues Be Very Careful with . Loose lips sink ships. “We always try these bad baby cases.” Picture the blown up to three feet by five feet and being shown to a jury.

FIELD MARKETINGFIELD MARKETING 7 Privacy of Personal Information Read the contract amendments. Know the requirements imposed on you. Live by them. Obtain written permission. Be prepared to demonstrate that you take privacy and security issues seriously. –Don’t get hammered by an inadvertent disclosure

FIELD MARKETINGFIELD MARKETING 8 Sample Privacy Requirements “ Agent’s use and/or disclosure of PHI shall be limited solely to the purposes for which such PHI is disclosed to Agent to perform his obligations hereunder….” “Agent shall implement appropriate physical, administrative and technical safeguards to prevent inappropriate uses and/or disclosures of PHI.”

FIELD MARKETINGFIELD MARKETING 9 The Lesson: Communicate Clearly and Thoroughly –Explain the policy and any riders. –Document your file. Lessons from Recent Cases

FIELD MARKETINGFIELD MARKETING 10 Lessons from Recent Cases Know Your Customers - Don’t let them apply for coverage for which you know they are not eligible. Know the Policy –Explain the benefits. If you can’t understand them, that is a problem.

FIELD MARKETINGFIELD MARKETING 11 The Bottom Line Conduct that is not careful could get you sued. Know the policies you sell. Protect the insured’s personal information. Match the policy to the insured. Explain the policy to the insured.

FIELD MARKETINGFIELD MARKETING 12 The Bottom Line Communicate accurately and clearly. (e.g., rate increases) If you don’t know the answer, admit it (and then find the answer). Document all conversations.

FIELD MARKETINGFIELD MARKETING 13 Awareness of State Regulations The ability to sell insurance is a privilege, not a right. Ignorance of state regulations is no excuse for noncompliance. State regulators may revoke an agent’s ability to sell insurance.

FIELD MARKETINGFIELD MARKETING 14 State regulators, in fact, have suspended and revoked agents’ licenses. Gust Know your clients, including what types of coverage they need and what they already have. Awareness of State Regulations

FIELD MARKETINGFIELD MARKETING 15 State regulators, in fact, have suspended and revoked agents’ licenses. West Know the scope of your authority and make sure your clients know it too. Awareness of State Regulations

FIELD MARKETINGFIELD MARKETING 16 State regulators, in fact, have suspended and revoked agents’ licenses. Stark Be careful about how you represent yourself. Know the laws of your state and the consequences for violating those laws. Awareness of State Regulations

FIELD MARKETINGFIELD MARKETING 17 State regulators, in fact, have suspended and revoked agents’ licenses. Smith Be thorough and honest when assisting clients complete applications. A client’s signature on the application does not relieve you of your responsibility. Awareness of State Regulations

FIELD MARKETINGFIELD MARKETING 18 Courts have held that agent’s representations and knowledge can bind insurers. Burns Be careful what you promise clients – your words may override the policy provisions. Agents Can Bind Insurers

FIELD MARKETINGFIELD MARKETING 19 Courts have held that agent’s representations and knowledge can bind insurers. Poston Make sure to clearly explain conditional receipts and document your explanation. Agents Can Bind Insurers

FIELD MARKETINGFIELD MARKETING 20 Suitability The importance of making a sound decision. Value of coverage and impact on clients’ lives. Suitability is not just “can the client afford the policy.”

FIELD MARKETINGFIELD MARKETING 21 Know What Questions to Ask The NAIC’s Model Long Term Care Insurance Regulation –Insurers should provide you with guidance. If they don’t – ask! –Know whether your state has adopted the NAIC Model.

FIELD MARKETINGFIELD MARKETING 22 Know What Questions to Ask Ability of the applicant to pay for the proposed coverage is a piece of the puzzle – not the whole puzzle! The applicant’s goals and needs regarding long term care insurance. The values, benefits and costs of applicant’s existing insurance.

FIELD MARKETINGFIELD MARKETING 23 Determining the Best Product for the Applicant Interview – take the time to do a thorough and complete interview. Suitability Standards – know what your clients have, what they are likely to need, and what they can afford. Know the Products – know the options, and understand how the policies actually work.

FIELD MARKETINGFIELD MARKETING 24 Questions ?

FIELD MARKETINGFIELD MARKETING 25 Thank You!