Read the Policies You’re Selling

Don’t assume that you know the intricacies of every industry policy. There is no standardization in the management liability segment – E&O, D&O, EPL, Cyber, etc. – and the differences can be even more drastic in the Excess & Surplus Lines market. Every carrier wants to differentiate themselves in their policies to look more attractive or exclude an issue they have concerns about. 

Your staff must be confident that they understand exactly what coverage the policies they are selling/proposing really provide. Ideally, the carrier proposal outlines any “additional” limitations/exclusions. However, it might not. This is one reason it is vital to read/review the policies you are selling, note the coverage provided, and highlight significant exclusions.

Failing to note exclusions or coverage aspects is a potential area of liability that could lead to E&O claims against your agency. 

It is recommended that when providing proposals, you:

• Include a disclaimer. This summary or proposal is provided for informational purposes only and does not replace the actual insurance policy. Coverage is subject to all terms, conditions, limitations, and exclusions contained in the issued policy and any endorsements. It is the insured’s responsibility to read the entire policy and confirm that the coverage meets their needs. If you have questions or require clarification, please contact us promptly. Failure to review the policy may result in coverage gaps or misunderstandings for which we cannot be held responsible.
• Provide specimen forms with each proposal. This gives clients an opportunity to understand what they are buying and ask questions up front.

It is common for limitations and exclusions to find their way into policies – and some can be significant. For example, Umbrellas are often thought of as “follow form” over the underlying, yet some forms state if the underlying coverage is not at the proper limit, the Umbrella will not respond at all if there’s a major liability claim. Differences can include unique coverage grants that make the coverage more expansive.

There are now options available to utilize artificial intelligence (AI) tools for summarizing and comparing policy forms, though they should be employed judiciously. For instance, it is possible to request large language models such as ChatGPT or Copilot to review and summarize coverage within a policy form; however, this typically produces an overview that may overlook or misrepresent critical details. Accordingly, these tools should not replace thorough review by an insurance professional who is well-versed in the nuances of coverage.

Some companies are developing AI tools specifically designed to compare insurance forms. These can be used to compare expiring coverage against the terms being offered at renewal with the current carrier or can compare multiple carrier forms against each other. The level of detail they provide varies depending on the product – and companies will often offer different levels of detail based on what you are willing to spend.

Keep in mind that these tools are still being developed and, depending on the package you purchase, may not provide all relevant details. It is recommended not to provide the summaries created by these tools to the clients. While this seems like a great sales tool, releasing these to the clients without human review could result in claims against your agency. 

TAKEAWAYS 

• Read the policies you’re selling and understand what’s covered and what’s not. Knowing policy language is an important part of the selling equation.
  
• Knowing this up front could help you sell more insurance, rather than finding out when there’s a loss that no coverage was in place for something.
• Show your true value by bringing to a prospect’s attention any gap in their current coverage dealing with a significant part of the prospect’s business.
•  Use caution when using AI tools to review and compare policy forms.