Implementation

The principles and examples that we have considered represent many of the common compliance issues that present themselves during the sales process up to the point at which the prospect signs the application.  A large percentage of ethical issues and compliance-related errors and omissions claims arise out of the practitioner's conduct following the sales interviews.  They arise principally out of two critical problem areas:

failure to obtain proper coverage, and
failure to maintain proper coverage.

These problems occur more frequently on the property & casualty side of the business; however, they can occur on the life insurance side as well.  Failing to obtain coverage is usually caused by one or more of the following:

a failure to properly analyze the client's situation and the risks involved
failure to request the proper coverage
a delay in requesting any coverage for a period of time, or
not receiving the proper coverage from the insurer

Failing to maintain coverage usually occurs because of a failure:

to renew coverage on a timely basis resulting from glitches in the mechanical operation of the agency, or
to notify the insured of non-renewal

Although these are not particularly significant areas of ethical or compliance breaches for the life insurance agent, such is not the case in the property & casualty business.  These two compliance problems account for about 35% of all errors and omissions claims for property & casualty agents.