Claire-ification

Are you a member with a question? Contact IA&B VP-Advocacy Claire Pantaloni, CIC, CISR to find the answer at 717-918-9202 or ClaireP@IABforME.com.

QUESTION:

I discovered a missing UM/UIM form in a file. Is it OK to backdate it to when the selection was effective and ask the customer to sign it?

ANSWER:

Agents know that a missing UM/ UIM form, or any selection form, can have significant repercussions if a claim occurs. If the carrier cannot produce the form limiting coverage, the insured will get the maximum benefit available even though he/she didn’t pay the appropriate premium. Because most of these records are kept in the agency, the carrier will generally turn around and demand that the agency pay the carrier back.

As to backdating, it is a common temptation – and pitfall – to backdate agreements when a signature is missing. However, the practice raises both ethical and legal concerns. Authenticity and transparency are key to any contract. Backdating introduces an element of deception and a modified timeline around the formation of the contract. This can erode trust and generate disputes that are sure to spell trouble for the producer. Therefore, the practice of backdating any contractual documents when a signature is missing should be avoided at all costs. Instead, a new signature should be secured with the current date.

Handling a missing form – if you find a policy for which a selection form is missing, you can reach out to the customer and point out that the document is missing and send him/her the forms again to date, sign, and return as soon as possible. Do not prefill the signature date on the form. If you are concerned that the policyholder will again not be diligent, let them know that absent the form returned by a specific date, the insurer will adjust the premium to reflect the fact that the selection form is missing and proceed to the change if the form is not returned.

Assessing and changing agency procedures – Implement clear processes to ensure that if customers do not return the forms by a certain date, the policy will revert to the level of coverage resulting from the missing form and the corresponding premium. When policyholders who dragged their feet returning the proper documents receive an additional invoice to reflect the coverage they failed to decline, they quickly reconsider and send signed forms. To make sure that the processes are followed, it is also advisable to audit your agency records on a regular basis.

Leveraging electronic options – Electronic signature products have made the process of securing complete signatures both easier and timelier. These products generally include their own automatic reminders and free up staff time, and cover letters can be added to personalize messages.

Finally, also keep in mind that if you discover a missing policy document, backdating a form could expose both the agency and the producer to an E&O claim, but also to regulatory action (consent order, fines or penalties, or worse), as well as carrier action (including agency termination).

This document is not a legal opinion and should not be relied upon as such. The intent of this document is to provide a general background regarding the topic or topics discussed, not to provide legal advice. Producers and agencies should consult an attorney regarding specific situations and specific questions with respect to the topic or topics covered in this document. Neither the Insurance Agents & Brokers nor any of its employees shall be responsible for any errors or omissions regarding any statements made in this document, nor any errors or omissions regarding any statutes, regulations, court rules, and/or any other government documents cited in this document.