AVOIDING AGENT LITIGATION

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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. Serfass
• Kristin M. Heine
• Drinker Biddle Reath LLP
• stephen.serfass_at_dbr.com kristin.heine_at_dbr.com

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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 dont 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.
• Dont get hammered by an inadvertent disclosure

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Sample Privacy Requirements

• Agents 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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Lessons from Recent Cases

• The Lesson
• Communicate Clearly and Thoroughly
• Explain the policy and any riders.
• Document your file.

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Lessons from Recent Cases

• Know Your Customers
• - Dont let them apply for coverage for which
  you know they are not eligible.
• Know the Policy
• Explain the benefits. If you cant 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 insureds 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 dont 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 agents ability to
  sell insurance.

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Awareness of State Regulations

• 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.

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Awareness of State Regulations

• 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.

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Awareness of State Regulations

• 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.

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Awareness of State Regulations

• State regulators, in fact, have suspended and
  revoked agents licenses.
• Smith
• Be thorough and honest when assisting clients
  complete applications. A clients signature on
  the application does not relieve you of your
  responsibility.

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Agents Can Bind Insurers

• Courts have held that agents representations and
  knowledge can bind insurers.
• Burns
• Be careful what you promise clients your words
  may override the policy provisions.

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Agents Can Bind Insurers

• Courts have held that agents representations and
  knowledge can bind insurers.
• Poston
• Make sure to clearly explain conditional
  receipts and document your explanation.

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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 NAICs Model Long Term Care Insurance
  Regulation
• Insurers should provide you with guidance. If
  they dont 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 applicants goals and needs regarding long
  term care insurance.
• The values, benefits and costs of applicants
  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!