RISKY BUSINESS
THE MIRROR TEST Does your client’s new policy match their old one? There are a lot of changes going on in the insurance industry and oftentimes change also means emerging risk. If you have listened to any E&O webinars lately, there is a good chance you have heard of the “mirror test”. If you are not familiar with this term, then it is something to pay attention to no matter what line of business you work in.
The agent has a duty to provide the insured with information on these changes and should also have documentation of the customer’s acknowledgment that they understand these changes. As with any material conversation, a customer sign-off would be ideal but an email from the insured would still provide a good defense if an E&O claim was made.
The reason we are talking about the “mirror test” is because the market is hardening. This change is causing agents to look for better pricing from new carriers to help their customer’s avoid premium increases. The risk? Well a new policy also means new terms and conditions. Does the insured still have the same limits and the same coverage options with their new carrier? It may not be a deal breaker if the coverage has some differences, but what is important is making sure the client is aware of these differences.
If you have questions regarding your current workflow when a customer is moved to a new carrier – or your lack of workflow – feel free to reach out to the team at IIAW for support. There have been E&O claims arising from this issue in the past and we anticipate seeing more of them during this hardening market. An important value of an independent agent is having access to multiple carrier options. We need to make sure this value does not also come with an increased E&O exposure.
AAA Independent Agents earn commission on each membership sold! For more information on becoming an AAA partner contact: Leo Plese, Regional Sales Director at lmplese@acg.aaa.com or (630) 328-7076
