The WNA legal team suggests Web site reviews in Spitzer aftermath.
The insurance industry is under scrutiny right now as a result of New York Attorney General Eliot Spitzer’s investigation and lawsuit against Marsh & McLennan. These recent events make it a good time to double-check that your agency is doing everything it can to portray itself accurately and properly.
Sheila Luken, corporate counsel for Winterthur North America (WNA), says that when regulatory officials conduct investigations, one of the first places they look is a business’ Web site. “Your Web site is your face to the world, and it’s an easy way for regulators to see what you’re telling your customers,” she says.
Sheila reviewed Web sites of top-producing agencies from both General Casualty and sister WNA-company Unigard as part of an audit to review what agents are portraying to customers. From that research, she comprised a list of do’s and don’ts to serve as best practices reminders in light of the recent investigations. In addition to reviewing this list, Sheila recommends that agencies examine their agency agreements and check that their Web site and any other materials handed out to customers adequately reflect these agreements. She adds that it may be helpful to meet with your agency’s legal consultant to go over your Web content.
Be careful when talking about pricing.
DO say that your rates are “competitive” and that you’ll work with customers to find coverages and premiums that they’ll be comfortable with.
DON’T say or imply that you can get a special price for certain customers or that you can influence your carrier’s pricing. Saying you can get better rates for certain customers hints at unfair treatment towards customers who can’t get those good rates. Some of the sites Sheila reviewed flat-out said: “We can influence carriers’ prices.”
Unfair pricing and bid-rigging is at the heart of the Spitzer case, so this is an area that warrants special attention from all agencies.
Correctly state if you’re an agent or broker.
DO explain the difference between a broker and an agent, if your agency has both types of contracts.
DON’T use the term “broker” if you are actually an agent. All of GC’s contracts are agency contracts, so in the capacity you work with us, you’re an agent. Agents have a fiduciary responsibility to carriers.
“Agent” is not interchangeable with “broker.” Broker contracts say that the broker has a contractual responsibility to the customer. Some of the Web sites Sheila reviewed explicitly and incorrectly said, “When you hire us to be your broker,” when the site was clearly talking about an agency, not broker, relationship.
Clearly demonstrate your relationship with the client and carrier.
DO promote your agency’s customer service, level and areas of expertise, range of coverages and value-added extras.
DON’T imply that you represent the policyholder. For example, refrain from saying you “always put the policyholder’s needs first” or you’re the customer’s “insurance consultant,” because that implies your loyalty only lies with them. (If your agency actually does consulting work as well as providing insurance services, distinguish those services.)
DO include a statement that explains your relationship with your carriers. For example, one Web site had a page dedicated to disclosing that it has profit-sharing agreements with all of its carriers.
DON’T use the word “partner” to describe your client relationship. Sheila explains that “partner” is a very specific legal term that demonstrates you’ve entered into a business partnership. On top of that, some agency Web sites include text such as, “We protect your interests as if they were our own.” Again, this makes it sound like your fiduciary responsibility lies with the client and not the carrier. “Real estate agents must disclose how they get paid and who pays what share. This is the direction we see our industry going as well,” Sheila says. “Agents may want to consider voluntarily disclosing their company affiliations as openly as real estate agents currently do.”
For more information please contact Anne M. Smith.