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FIELD
MARKETING
AVOIDING AGENT LITIGATION
Session 35: February 28, 2006
Session Producer:
Stephen Serfass, Associate
Drinker, Biddle & Reath, LLC
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LITIGATION RISKS FACING LTCI PRODUCERS
Stephen A. SerfassKristin M. Heine
Drinker Biddle & Reath LLP
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OUR GREEK CHORUS
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OUR GREEK CHORUS• Gail Holubinka, Vice President, Business
Development, MedAmerica Insurance Company
• Nancy Morith, President, NP Morith, Inc.
• Alisa Murphy, Director of Process Development and Audit, CNA
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Rate Increase Communications
• You are the front line – what you say matters.
• Be clear.
• Be correct.
• “I don’t know” is an acceptable answer.
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Email Issues
• Be Very Careful with Email.
• Loose lips sink ships.
• “We always try these bad baby cases.”
• Picture the email blown up to three feet by five feet and being shown to a jury.
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Privacy of Personal Information
• Read the contract amendments.• Know the requirements imposed on you.• Live by them.• Obtain written permission.• Be prepared to demonstrate that you
take privacy and security issues seriously.– Don’t get hammered by an inadvertent
disclosure
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Sample Privacy Requirements• “Agent’s use and/or disclosure of PHI
shall be limited solely to the purposes for which such PHI is disclosed to Agent to perform his obligations hereunder….”
• “Agent shall implement appropriate physical, administrative and technical safeguards to prevent inappropriate uses and/or disclosures of PHI.”
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• The Lesson:
Communicate Clearly and Thoroughly
– Explain the policy and any riders.
– Document your file.
Lessons from Recent Cases
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Lessons from Recent Cases
• Know Your Customers
- Don’t let them apply for coverage for which you know they are not eligible.
• Know the Policy
– Explain the benefits. If you can’t understand them, that is a problem.
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The Bottom Line
• Conduct that is not careful could get you sued.
• Know the policies you sell.
• Protect the insured’s personal information.
• Match the policy to the insured.
• Explain the policy to the insured.
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The Bottom Line
• Communicate accurately and clearly.
(e.g., rate increases)
• If you don’t know the answer, admit it (and then find the answer).
• Document all conversations.
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Awareness of State Regulations
• The ability to sell insurance is a privilege, not a right.
• Ignorance of state regulations is no excuse for noncompliance.
• State regulators may revoke an agent’s ability to sell insurance.
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• State regulators, in fact, have suspended and revoked agents’ licenses.
• Gust
Know your clients, including what types of coverage they need and what they already have.
Awareness of State Regulations
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• State regulators, in fact, have suspended and revoked agents’ licenses.
• West
Know the scope of your authority and make sure your clients know it too.
Awareness of State Regulations
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• State regulators, in fact, have suspended and revoked agents’ licenses.
• Stark
Be careful about how you represent yourself. Know the laws of your state and the consequences for violating those laws.
Awareness of State Regulations
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• State regulators, in fact, have suspended and revoked agents’ licenses.
• Smith
Be thorough and honest when assisting clients complete applications. A client’s signature on the application does not relieve you of your responsibility.
Awareness of State Regulations
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• Courts have held that agent’s representations and knowledge can bind insurers.
• Burns
Be careful what you promise clients – your words may override the policy provisions.
Agents Can Bind Insurers
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• Courts have held that agent’s representations and knowledge can bind insurers.
• Poston
Make sure to clearly explain conditional receipts and document your explanation.
Agents Can Bind Insurers
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Suitability
• The importance of making a sound decision.
• Value of coverage and impact on clients’ lives.
• Suitability is not just “can the client afford the policy.”
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Know What Questions to Ask
• The NAIC’s Model Long Term Care Insurance Regulation
– Insurers should provide you with guidance. If they don’t – ask!
– Know whether your state has adopted the NAIC Model.
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Know What Questions to Ask
• Ability of the applicant to pay for the proposed coverage is a piece of the puzzle – not the whole puzzle!
• The applicant’s goals and needs regarding long term care insurance.
• The values, benefits and costs of applicant’s existing insurance.
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Determining the Best Product for the Applicant
• Interview – take the time to do a thorough and complete interview.
• Suitability Standards – know what your clients have, what they are likely to need, and what they can afford.
• Know the Products – know the options, and understand how the policies actually work.
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Questions
?
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Thank You!