In today’s society, the trend seems to be to blame someone else whenever you can, and get paid to do it through lawsuits. Remember the woman who sued over the spilled hot coffee on her leg in the car? Or the woman who sued a fast food restaurant because her son was fat? Insurance agents also are vulnerable to all sorts of lawsuits.
One of the top reasons agents are sued is because of their failure to communicate important information to their customers, according to Virginia Bates of VMB Associates, a management consulting service for the insurance industry. Insureds have sued claiming the agent failed to explain coverages or to recommend coverages. They have sued claiming the agent used insurance jargon and so it was not clear to them what was covered and what was not. They have sued because they claim the agent never informed them about their choices.
But the most common claims from insureds are, “I didn’t know” or “That was never offered to me.” Thus, we have a perceived, or real, lack of communication.
Agents can take steps today to reduce the possibility of getting sued for failure to communicate. Here are some “do’s” and “don’ts” to protect yourself and your agency.
- Start with automatic communications. Even though agents claim they simply don’t have the time to contact all their customers regularly, they can implement an automated e-mail program to send out important information. Start with monthly e-mails on pertinent subjects, such as COBRA changes, and explain important insurance terms or coverages, etc. Quarterly e-newsletters also can help communicate information and stimulate conversations. Send annual insurance check-up letters at renewal. Make sure to document each communication to reference later if the need arises.
- Consider holding seminars or webinars on hot topics. There’s a lot of talk out there these days about changes to health insurance, retirement accounts, long term care and more. Develop a series of seminars, and invite customers to attend.
- Utilize the Internet. Post lots of good information on your Web site. Post blogs and set up pages on sites such as Facebook and LinkedIn to disseminate information.
- Ask your customers. Post interactive surveys on your Web site and invite your customers to complete the survey. Offer a live chat option on your site. Have your receptionist and CSRs ask one or two survey questions of customers when they call in. The information you gather will help you understand the needs and concerns of those you serve.
- Initiate regular one-on-one communication. Bates urges agents and their staffs to customize communications so that they are specific to the needs of the individual. Most agents view this as the most difficult process to implement for several reasons:
- We don’t have enough time
- We don’t have the systems in place to do so
- Our CSRs don’t like to sell
- Our CSRs don’t know enough about the options to feel secure in discussing them.
Removing the obstacles
Bates offers these suggestions to overcome these obstacles:
- Automate! Many agencies are still doing business in a traditional manner—using paper files, making duplicate entries, requoting policies through many different proprietary Web sites. By taking advantage of all the automation options available, agents can free up 2 hours per day for other activities, such as talking with customers.
- Update databases and invest in customer relationship management software to keep current on what’s been done, what should be done, and the feedback you’ve gotten.
- Put people where they make the most sense. If you’ve got employees who are great with handling paperwork, organization and processes but not so great at talking with customers, change their job description and responsibilities so they can do what they are best at. Put those who are good with customers and enjoy talking on the phone in the position to utilize their skills.
- Re-educate CSRs and sales staff to think of themselves not as salespeople, but as consultants helping customers manage their risks.
- Utilize your agency management system to the best of its capabilities—keep records updated, organize and document all activities on one system.
- Leadership must lead the way. These changes require a cultural shift from reactive to proactive. Agency principals must set a good example and expect the same from their staffs to make it stick.
Practices to avoid
Don’t make promises you can’t keep. Don’t use language in your communications, advertising and marketing that may be misleading, such as “no risk refused,” or “lowest rates,” or “we’re the experts,” or “don’t worry, we’ll take care of it.”
Don’t use insurance jargon. Do people really understand when you explain something as “all risk” or “comprehensive?” For example, most people don’t understand what an umbrella policy truly covers. Make sure you take the time to explain things in English and the customer has acknowledged that they understand.
Don’t assume everything is fine. Keep notes, document your communications, and record responses from the customer. Not only will you avoid E&O claims, you’ll have happier employees and customers—and probably more sales as a result of your communications.
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Donohue is executive director of I-Marketing Management, an Aartrijk service providing marketing-communications strategy, tactics and support exclusively for independent agents. She can be reached at laurie@Aartrijk.com or (888) 876-4869.