Claire-ification

IA&B Vice President - Advocacy Claire Pantaloni, CIC, CISR

Are you a member with a question? Contact Claire to find the answer at 717-918-9202 or ClaireP@IABforME.com.

QUESTION:

How can I get rid of a customer who is becoming an issue to my agency and staff?

ANSWER:

At some point, every agent runs into a “nuisance” customer who is aggressive, offensive, or tries to trip up agency staff. However, getting rid of such a customer is not always simple and requires precautions. The best options to sever the ties are listed below. Regardless of which you choose, you need to address the second part – formalizing the separation. To protect the agency, you must make it clear that your duty to the policyholder has ended.

OPTIONS

Ask (diplomatically) the customer to go elsewhere, transfer the customer to the carrier’s in-house agency, if they have one, or consider a Broker of Record (BOR) letter if you have a friendly competitor willing to take on a challenging customer. If you can frame the issue to show that there is a lack of trust and that it seems fruitless to pursue a business relationship when trust is strained, the customer should see the writing on the wall, and you should be able to gently push them out. Obviously, if the customer has been offensive or even inappropriate to your staff, this may give you more freedom in your communication, but we would urge you to stay courteous.

What about asking the company to non-renew? While likely the first thing that comes to mind, it is the most difficult to implement and most likely to cause other issues. Non-renewing implies compliance with state laws and regulations governing policy cancellations, including the requirement to disclose the reason for cancellation/ non-renewal and for that reason to be permissible. For policies that are mandated by law (e.g. personal auto), non-renewals and declinations of coverage must be documented so that the applicant can ultimately access the state’s market of last resort. Caution is in order.

FORMALIZING THE SEPARATION

Because a few E&O cases have arisen from agents’ severing ties without formalizing that separation, it is essential to retain proper documentation. A letter placing the customer on notice that the agency will no longer be the agent of record and that coverage will not be renewed through the agency should be sent by certified mail, return-receipt requested.

The letter should identify the carriers and list the policies currently placed with the agency so that the customer knows exactly for which policies the agency will no longer be the agent of record (use the term “including” in case a policy is accidentally omitted), and it should include when this change becomes effective. IA&B offers a template letter that can be found at iabforme. com/member-resources/agencymanagement/eo-prevention.

Be sure that no monies are being accepted by the agency for policies currently in force. Maintain the file and all documentation.

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.