THE NEWSLETTER FROM HOWARD CANDAGE

Howard Candage, president of H. E. Candage, Inc., offers insights into real life problems faced by insurance professionals in their day-to-day lives.

The articles are divided into four categories: Agency Management, Commercial Lines, Personal Lines and Claims


AGENCY MANAGEMENT

Here is installment one of a Case Study:


A friend and client of mine, who owns an agency, said to me one day, "I want to have a million dollars to retire on." I thought about his situation and got back to him a few days later.

"You're not going to make it," was my reply. Of course, he asked why. So I explained to him that unless he made drastic changes in the way he was structured, the goal could not be achieved in the amount of time he had left.

My friend left in disbelief.

Over the next few months, the subject would come up occasionally in conversation. But my friend was unwilling to make the necessary drastic changes because they would require sacrifices he was not willing to make on his own behalf. Then one day I asked him, "if not for you, how about for your wife?" That shocked him into action. He became willing to take steps for his wife that he had been unwilling to take when he saw them as only for his benefit.

We laid out the necessary steps, some of them not so pleasant, and now he is planning his retirement with several million dollars to retire on. How did we do it? Read future issues of our newsletter and we will lay out the case study in detail.

Stay Tuned For Our Next issue: The Partner

COMMERCIAL LINES

Occurrence GL

We have cancelled the GL and Joe Contractor has retired. All should be well with the world. But it is not.

Joe's attorney just forwarded papers in a lawsuit against Joe. The case involves a house deck that collapsed six months ago. You canceled Joe's policies over two years ago, and the policy you had in force for him will NOT cover occurrences AFTER the cancellation date!

Joe has an ongoing exposure and we need to learn to provide discontinued operations coverage to cover the possibility of occurrences arising from products still in the marketplace.

Don't deal with Joe? You only deal with MEGA Construction? The same guideline applies whether you deal with large commercial lines or small commercial lines. Think "acquired entities", "discontinued entities"… You may have the same issues.

Who did you say our E & O carrier was?

· If there continue to be products in the marketplace, recommend discontinued operations coverage!


PERSONAL LINES

Extended Non Owned

One of our clients came into the agency today and reported that he had an accident with the truck he drives at work. Apparently the claim was serious enough so they have exhausted the liability limits of the commercial auto policy. He wants to know if there is any coverage on his personal auto policy. I told him there was not and he then asked if we could get it for him. Can we or could we have gotten it?

We could have added "Extended non Owned" auto coverage to his personal policy to cover just this exposure. The endorsement covers the use of a "regularly furnished" auto, for liability coverage. There is practically no underwriting, and the coverage is very inexpensive.

· You should have a methodology in your agency exposure identification process to ask if your clients regularly operate any other vehicles. If they do you should be offering "Extended Non Owned" to pick up this ancillary exposure. You at least need to give the insured the choice to turn it down, rather than having to talk to your E & O carrier about this claim!

CLAIMS

Agency Claims

You denied your client's claim and he is pretty upset. Was it the way you denied it? What is the secret to denying a claim without upsetting the client?

I watched one of my colleagues at the agency deny a claim and get the ex-dates for the rest of the policies we did not write in the same phone call. How did he do that?

· He made sure he had all the pertinent information about the claim by asking lots of questions and showing he cared about the client and his claim.

· He apologized for asking so many questions, and then told the client, "Homeowners policies do not cover this kind of loss".

The Secret?

· Never make the denial "personal". Do not say, "You are not covered." Always indicate that the FORM does not cover this kind of loss. Saying "YOU" are not covered is an insult, but to point out that "NO ONE" would be covered in this situation makes the denial much less likely to anger the client!

· Making it personal COULD lead you and the client down the road to an E & O claim!