For many insurance agencies, policy checking is often viewed as an optional, administrative task. However, as errors and omissions (E&O) claims continue to rise, this oversight carries increasingly significant consequences. Especially in hard markets, insurers are increasingly stringent on claims, particularly those of clients of smaller brokers and agents. Clients are also becoming more prone to litigating against anyone they can find a reason to!
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Errors are growing, and the probability of it hitting you is getting higher!
The insurance industry is facing intensified complexities and increasing error risks due to automated submission ingestion, reliance on 3rd party data sources, outsourced data entry and increasing workflow complexity within carriers. This is resulting in growing mismatches between the coverage requested and what’s provided in quotes or policies. Ignoring policy checking is not sustainable; it’s only a matter of time before statistical probabilities catch up, possibly resulting in a costly E&O incident with severe financial and reputational repercussions.
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Policy Checking: Getting it right
Policy Checking is a very time-consuming and tedious task, one that many people do not have the time or patience for. On top of that, to do it properly requires a lot of knowledge and experience. Language across documents can be complex, things that appear at one place in one policy will appear in a totally different place in another, yet need to be found and compared. The situation gets even more tricky when you are dealing with E&S policies or lines like Cyber Insurance, where there is a lot of diversity of coverage, terms & conditions and little uniformity of language.
To make sure your customers are properly covered, you will need to compare every new or renewed policy against the expiring term and often also include other submission information, such as detailed property and auto schedules, to make sure every location or vehicle is covered properly.
If you are allocating it to someone internal or external, this is your essential guide to getting it right consistently:
Have an established, comprehensive checklist, ideally one that is tailored by line, class and type of policies (e.g. admitted vs. non-admitted), outlining all necessary details for verification.
Develop a Standard Operating Procedure (SOP) which must be followed each time, every time. Make sure it covers what to do in different scenarios like when specific documents are not available, or the expiring and new policy have significantly different coverages or T&Cs.
Make sure the check output is detailed, and logged appropriately
Provide the checker proper access to relevant documents like submission packs, data packs from the client, quotes, binders and prior policies.
Empower checkers with tools and time: Avoid rushed reviews to prevent overlooking critical details.
Finally getting a tick-mark spreadsheet, like many outsourcing firms produce is not enough. It does not give you the ability to audit their work or perform the quality assurance you need to get peace of mind. Just having a sheet with ticks does not prove that they actually reviewed the information properly – it just means they checked the box!
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As a smaller agency, what are your options for high-quality Policy Checking?
While larger brokers and agencies may have extensive internal resources, smaller agencies face a different set of challenges. Options include:
In-house: Although demanding, in-house policy checking ensures familiarity with client needs and policy details. However, given the demands on business owners and limited staff, balancing client-facing tasks with in-depth policy verification is challenging.
Virtual Assistants: Agencies often leverage VAs for cost-effective support. This can work well if the VAs you are using are properly trained and credentialed, are monitored for attention to detail, provided with comprehensive guidelines, have access to all required documents, and have the necessary skillset for complex comparisons. If using offshore VAs, cultural resistance in bringing up issues or reluctance to ask questions can also lead to things being brushed under the carpet – watch out.
Larger Outsourcing Firms: While some major brokers turn to large outsourcing firms, smaller agencies may not receive the same level of attention. Additionally, a decline in staff quality has been noted as firms increase reliance on low-cost offshore resources. Smaller agencies should therefore assess the quality and consistency offered by these firms before proceeding.
Harnessing AI for Policy Checking: Welcome the ‘specialist’ Policy Checker
Listen to any news media today, including Insurance and Technology news, and you can not miss all the hype around AI – Generative AI or GenAI in particular. It can write essays, draw amazing human-like pictures and mimic celebrities like you would not believe! But does it understand Insurance and what is its relevance to this topic?
Artificial intelligence, specifically tools like BluePond’s Broker CoPilot, is redefining the way agencies approach Policy Checking. Unlike generic generative AI, specialized AI-driven solutions are tailored for insurance contexts, capable of ingesting policy documents, understanding complex terminology and comparing vast amounts of data. These tools excel in consistency and precision, particularly in areas where the human focus may wane, such as analyzing lengthy documents or comparing extensive auto and property schedules. For example, who enjoys comparing details of a 100 automobiles across hundreds of pages – AI does!
With these AI-enabled tools, agencies can achieve a level of thoroughness and accuracy that not only reduces the risk of E&O claims but also adds tangible value by ensuring the integrity of policy data and accuracy of coverage alignment.
Firms like BluePond which specialize in commercial insurance Policy Checking, also have trained human oversight of the AI-generated output and deep established checklists and guidelines, that give that extra level of confidence.
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Transforming Policy Checking into a value-added client service
Effective policy checking serves dual purposes: safeguarding against agency risk and enhancing client trust. Presenting clients with a policy summary after a thorough check can act as a value-added service, demonstrating commitment to their coverage needs. This is particularly valuable when onboarding new clients, placing clients with new carriers, or addressing concerns over premiums.
By distilling complex policy data into a client-friendly summary, agents can educate clients on their current coverage and potential exposures, building rapport and reinforcing expertise – a reminder of why the client chose you as their agent of choice. This proactive approach deepens client relationships, showcases diligence and provides a strategic edge in a competitive marketplace.
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Conclusion: From compliance task to strategic differentiator
Policy Checking need not be viewed as merely a chore; it is an opportunity to transform a routine task into a core service that elevates client satisfaction and mitigates agency risk. In an evolving industry landscape, leveraging both skilled human oversight and advanced AI solutions positions agencies to deliver higher levels of service, differentiate themselves in the marketplace and achieve long-term client loyalty and success.