In her presentation titled “When What You Don't Know About Liability Can Hurt You” she said the combination of more “greenies (new retail agents) coming into the insurance business along with retail agents moving into the wholesale agent ranks” is creating a situation where more agents are looking to the wholesale market to fill their clients' risk-transfer needs.

What they lack, she added, is the understanding that policy language is critical, warning that “what seems very simple has gotten very complex” thanks to the rising threat of coverage lawsuits.

Part of the problem, she said, falls to insurance companies, which have developed silos of responsibilities separating claims adjusters and underwriters. Because the two sides of the policy equation do not work together, they at times come up with different interpretations of the same policy application, she noted, instead of working together to arrive at the same answer going in.

The other problem, she said, is that some retail agents have become “very sloppy,” believing that a businessowners policy covers all commercial risks, which is not the case.

“You are going to be trainers for the next couple of years because retailers need to have explained to them what kind of information you need,” Ms. Flahault said. “You understand what you need and you have to pass it on to them.”

To underscore the need to understand the complexity of policy language, Ms. Flahault and the group reviewed some past claims and the legal decisions that came down from them. The MGAs found in the examples that the courts' ultimate decisions differed decidedly from how they thought the policy should be applied.

“Sometimes we take for granted what we know is what everyone else does, but that's not necessarily true,” she continued. “Sometimes it's just a matter of presenting things in a different way to them and they say, Gosh, why didn't I think of it that way before.'”

Reproduced from National Underwriter Edition, May 28, 2004. Copyright 2004 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.