Lying to the Carrier or Your Clients?

[1manshow]

Recently reviewed a body shop acct. and pointed out to the owner that his agent had a good reason for not putting all his lines with the same carrier. The agent had rated the garage exposure with selective at 26K payroll and wrote the comp with another carrier... his actual payroll is closer to 300K. I explained that we do not operate like that and that an audit from selective would result in a quadruple rate increase. I suggested that he ask his agent about the classification and potential audit. The agent's answer....don't you worry about that.

Not that I'm shocked to see someone blatantly lying to a carrier but how do you face the client when the audit finally happens?

 

[AZDave]

For garage exposures, some carriers use a maximum payroll of $5200/employee for the gl and not the actual payroll. Maybe this is one?

 

[Derrick]

> but how do you face the client when the audit finally happens?

Have some other companies lined up or at least in mind. Tell him we either do it the right way or not at all. Explain to him that not only the other agent did something unethical, but possibly illegal. And that's not how you run your business. Explain to him that you will try your best to offset the increases and look at discounts and what not but you're not going to break the law to save him a few bucks.

 

[insurance1822]

^ I don't think he needs your input little producer. 1manshow has been around for awhile.

 

[mattupthehill]

^ I don't think he needs your input little producer. 1manshow has been around for awhile.

Not sure if you are joking or not.

But if you're serious; why did he post a thread if he doesn't want input? If he's looking for input from a specific person or agents with x amount of posts why not state that from the outset or PM? Forums are meant to encourage conversations.

 

[Placementkid]

^ I don't think he needs your input little producer. 1manshow has been around for awhile.

Who pissed in your Cheerios this morning? I'm guessing this is just how you normally operate around here and that's pretty sad if so.

I think you could have at least contributed to the thread if you're going to come in and **** on someone trying to be helpful...

 

[Derrick]

insurance1822 has had it out for me on day one for some reason. I think he has "compensation" problems, and I'm not talking about anything insurance, so he goes onto message boards where he's anonymous and bullies people.

He seems very smart in his posts but the way he talks to some people on this forum, or about marketing reps, or about insureds sometimes makes me think he's about 13 years old.

Any way, all I was stating is that sometimes it's best to let the insured that has a shady agent get burned. Right now the insured is loving those rates and is just following his shady agents advice. It's not him providing such info and he can play dumb. But by warning him ahead of time, following up to reinforce the relationship, and having some companies in mind when poop hits the fan, that garage will become a client of 1manshow for life regardless of price for his display of professionalism.

 

[dean8287]

Recently reviewed a body shop acct. and pointed out to the owner that his agent had a good reason for not putting all his lines with the same carrier. The agent had rated the garage exposure with selective at 26K payroll and wrote the comp with another carrier... his actual payroll is closer to 300K. I explained that we do not operate like that and that an audit from selective would result in a quadruple rate increase. I suggested that he ask his agent about the classification and potential audit. The agent's answer....don't you worry about that. Not that I'm shocked to see someone blatantly lying to a carrier but how do you face the client when the audit finally happens?

It's awful. I see this a lot on contractors when the WC is with another carrier. When you explain this to an insured and they go along with the old agent anyway it's really someone that you do not want. This same insured is the one who complains how much he hates insurance companies after a claim or audit when it was all caused by him/her trying to bend the rules. When I find an agency doing this I start to refer all of the business I don't want to them. They will take anyone so I bog them down with the problem clients. "Oh you have had 3 big claims in the last 3 years? I'm really not set up to do that, but I know XYZ agency down the street does really well on accounts like yours. Give them a call, they should really be able to help you." Then you can focus on the good accounts and let your competitor waste time on the poor business.

 

[Chrisl]

> but how do you face the client when the audit finally happens?

Have some other companies lined up or at least in mind. Tell him we either do it the right way or not at all. Explain to him that not only the other agent did something unethical, but possibly illegal. And that's not how you run your business. Explain to him that you will try your best to offset the increases and look at discounts and what not but you're not going to break the law to save him a few bucks.

We are primarily commercial lines. We also rate things correctly or not at all. We have of course, through the years, passed on/not written a huge amount of business. I have no problem with that. I sleep with a clear conscience at night.

That being said, I would never outright malign or defame a competitor as strong of an urge I may have to do so. That can be an expensive legal road no one would want to go down.

Could the other agent/agency have purposefully called a duck a chicken for better pricing rather than calling a duck a duck? Certainly.

Picture a few other scenarios that could be at play......

Has the business' operations changed? Perhaps a business started out in landscaping, was originally rated as landscaping but evolved into general excavation as the primary class and we can't say as the competing agent whether the current carrier is fine with landscaping.

Up until recently, Selective automatically included $50K in sub costs in their package policy. Not knowing that, as a competing agent, if the insured subbed out $50K, I could jump to conclusions with my assumption that they're not being rated for sub costs since it wouldn't be on the dec and tell them not only will they get bit on audit, but their current agent screwed up....not the case in that scenario.

On work comp, at least in our state of MN, while the assigned risk pool underwriters are a good resource to answer questions such as: "I'm quoting a biz that does: X, Y and Z. What class codes should I use for that kind of exposure?" Each private carrier most definitely can decide to assign a class code that may be different than what the state pool would assign and different from what other private carrier would assign.... Would I have to rate a metal pole building contractor with 5645 Carpentry Code whereas a current carrier may be perfectly fine with 5538 Sheet Metal Siding, a potential difference of $10 in the remuneration rate translating to a difference of thousands in premium for a decent sized account? Absolutely.

I will reiterate the fact that absolutely there are losers that "ruin it for the rest of us" in our industry. It's not a level playing field in that regard. The larger the premium, the more agents vying for a crack at the account and you can virtually guarantee you'll see off the wall rating taking place. It's for this reason that we personally don't get jazzed about being in the mix of a half dozen agents bidding in a six figure premium account.

My key point is, be very very careful in pointing the finger at another agent and alleging anything. It is at least possible that you may not know the whole story and could end up with the other agent having a bite as bad as their bark.

Turn the tables and think of a scenario where one of YOUR underwriters got creative with rating/pricing on one of YOUR accounts. I'm speaking of a scenario where based on that particular account's merits and the underwriter's authority the underwriter rated a certain way intentionally that may not at face value look "correct". Now, picture how you would feel if a competing agent started planting seeds with your insured that you not only rated incorrectly, you're unethical and dishonest in doing so. What would your reaction be?

Chrisl