The Road Ahead: Meeting Old Challenges with New Technology


Think about it: just 100 years ago, people traveled by horse, wrote letters to communicate and used candles to provide light. Can you imagine doing all three simultaneously? Well, today that same person would be driving down the road in a much-improved ride, using his headlights for illumination while speaking to a customer on a hands-free device. How times have changed!

Technological innovations have indeed changed our everyday lives, both at home and at our local insurance agency. They have provided boundless savings in time and money, but can also lead to inconsistencies and confusion.

The ever-increasing utilization of e-signatures has revolutionized the way agencies work and, in some respects, made them more efficient. A producer can quickly and easily reach her customers at a moment’s notice when time, schedules and geographic distance would otherwise be a barrier.

E-signatures, if used properly, can actually enhance an agency’s defense if a lawsuit is filed against them. Take the example of an agency that procured a commercial property policy for a new client. The producer reviewed the application over the phone with the client and discussed each question before inputting the answer. The client responded “no” to the question regarding whether he had filed bankruptcy in the past 5 years. This response was recorded on the application. The completed application was uploaded to an online service (such as DocuSign, Silanis and DocVerify), then tagged with special annotations where signatures were required and sent to the client for his e-signature. Client e-signed, emailed to the agency, the application was processed and a policy issued.

A few months later, a fire engulfed the property which burned to the ground. A claim was submitted to the carrier who completed an investigation and discovered that the client had filed for bankruptcy less than a year before the fire. Not surprisingly, the policy was rescinded based on material misrepresentation in the application. The client sustained a significant loss with no money coming from the carrier. As a result, he decided to pursue a claim against the agency for inputting incorrect information on the application. The client swore up and down that he told the producer about the bankruptcy and never actually signed the application.

What the client may not have known is that, in most jurisdictions, electronic signatures are both legal and binding to the same extent as a ‘wet’ signature. An e-signature on an application demonstrates that a person intends to commit to the contents of the insurance contract. In the case above, we were able to submit as evidence relevant details such as location, time, date and IP address of the e-signing party — information that bolsters the legitimacy of an e-signed document if a dispute over the authenticity of the signature arises.

The case above was a perfect example of how new technology can work to an agency’s benefit. But these benefits do not come easily. Ongoing innovations and changing technology come with a need to be fully informed as to how the systems function and – just as important — consciously aware of how the systems ‘look and feel’ to the user and how they actually operate.

In another case, an agency procured a homeowner’s policy for a client living in Florida. A screen enclosure endorsement was added to the policy, which is not unusual in the state. A request was made after policy inception for an increase in Building limits. A signed approval was received from the client to complete the limits increase. All good so far – but next came the tricky part: the producer accessed the carrier’s website and inputted an increase in limits. The change request was approved by the carrier and the limits were increased.

Hurricane Irma made landfall in September 2018 causing minor damage to the client’s house but completely destroyed the pool cage. It wasn’t until the carrier began their adjustment of the loss that the client was notified that she had no coverage for the pool cage. How could that be?! Screenshots from the carrier’s website clearly show that the Screen Enclosure endorsement box was unchecked at the same time the limits increase was entered. The producer had no recollection of doing this, but the presumption is that he must have inadvertently clicked on the Screen Endorsement box without realizing what had occurred.

Having direct access to a carrier’s system can facilitate the process placing or renewing coverage and reduce the time it takes to effectuate policy changes. Nonetheless, be forewarned: inadvertent changes can have significant negative ramifications for your client and, ultimately, your agency.

As a wise man once said, “Technology is great – until it isn’t.” There’s a simple message there: technology may have improved, but it will never be foolproof. That new ride with its fancy headlights and hands-free phone may be sweet, but never forget that there will always be a new pothole to match it just around the corner…

Call IIAT’s Gunnar Kephart at 800-880-7428 to learn how IIAT Advantage E&O can help protect your business against E&O claims.

The author of this article, Barbara Rocco, is an Assistant Vice President and Claims Specialist with Swiss Re Corporate Solutions and works out of the Chicago officeInsurance products underwritten by Westport Insurance Corporation, Overland Park, Kansas, a member of Swiss Re Corporate Solutions.

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