Chapter 7 Building towards professionalism Flashcards
Whos responsible for the admin of Insurance Act in Alberta?
Insurance Council
Define Ethics
The principles of conduct governing an individual/a group. This relates to the duty & obligation to others
3 temptations which could cause a broke to act unethically
- to sell more insurance then needed
- to sell higher priced coverage when equal coverage is available at a lower price
- recommend the policy with the highest commission percentage
6 reasons a brokers license may be revoked
- guilty of misrepresentation, fraud, deceit, or dishonesty
- contravenes any provision of the insurance act of its equivalent
- Unreasonably fails to pay insurer premiums collected & retained beyond the term in the agency agreement
- places insurance with unlicensed insurers
- proves to be incompetent or untrustworthy to transact insurance
6.not following bylaws of province insurance councils
Brokers duty to insureds/clients
i) provide coverage best suited to clients needs,& to not take advantage of clients lack of experience/knowledge
ii) to be competent to perform the services undertaken on the client behalf
iii) hold affairs of a client in strict confidence, unless authorized or required by law to divulge such info
iv) to serve clients in a conscientious diligent & efficient manner
Brokers duty to Insurers
i) to abide by the terms of the agency/broker agreement
ii) to adhere to the binding authority granted b insurer
iii) deal honestly with the monies held in trust for insurer
iv) discuss to insurer all material facts about the risk even if such info might jeopardize the placement of the risk
Brokers duty to other brokers
i) use fair methods of competition in solicitation of business, consistent with the honor & dignity of the profession
ii) encourage public respect for & endeavor to improve the practice of the broker vocation
iii) co-operate in every reasonable way for the betterment of the industry
iv) treat fellow brokers with respect
v) not to harm the reputation of a fellow broker
Characteristics showed by all professions
- commitment to high ethical standards
- high standard of education preparedness & training, with mandatory continuous education
- formal association or society with regulating power over its members
- public recognition as a profession
6 common causes of brokers E&Os
1.inadequate coverage ( failure to provide proper coverage & other issues
2.misrepresentation & description errors
3.cancellation/renewal errors
4.policy change errors
5.processing delays
6.agency agreement violations
which common causes of E&Os is the largest cause?
inadequate coverage, failure to provide proper coverage
Examples of inadequate coverage provided
Examples:
- sewer backup missed
- recommending to a client against coverage on the erroneous assumption the risk is already insured
- clerical error resulting in loss or misplacing of client files
Examples where improper handling of renewals can cause problems
i) not renewing at all (missing automatic renewal process)
ii) not renewing adequate coverage (advising of changes in coverage, terms or conditions, new market has comparable coverage)
iii) not warning of pending expiry ( re-minding all insureds when renewal up-coming, any concerns on coverage continuation)
6 measures that will help brokers prevent E&Os
- ensure you are acting within the level of competence
- take all steps necessary to properly determine your clients needs
- keep within the bounds of your binding authority
- allow time to place coverage, advise client it could take some time, if difficult
- be advisers, rather than deciders for your client, let them know the options, &let them select their choice
- know the coverage & insurers & differences between each (common exclusions or addons)
8 steps a broker should follow when they have notified of a claim
Step 1: Report the claim immediately to the insurer
Step 2: Inform the insured they will be contracted by an adjuster & remind them of the duties imposed by the policy
Step 3: Do not authorized the insured to proceed with repairs or replacement nor make any statement that would commit the insurer to any course of action
Step 4: If certain loss is not covered, inform the insured of the fact
Step 5: Follow up periodically with the insured to ensure settlement is progressing
Step 6: Maintain proper claims records
Step 7: Be helpful to insureds while at the same time, avoiding any interference in the adjustment of the clam
Step 8: Maintain their integrity & professionalism
What’s the best defense against E&O claims & why?
Documentation
why?
- usually the word of the client over the brokers, so if all conversations documented, or confirm in writing, less chance of lack of credibility on you part