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Agency policy and procedure manualAgency policy and procedure manualResource kit 90076Table of contentsOverview1. Introduction2. Agency mission statement3. Organizational structure of agencyAgency backgroundProfile of agency personnelOrganizational chartProfessional associations to which agency belongs4. Office proceduresActivities requiring licensureAgency formsAuditsBindersBusiness hoursCancellation and/or nonrenewal follow-upCertificates of insuranceClaims processing chartCorrespondenceCustomer office visitsCustomer relations creedEndorsementsErrors and omissions insuranceFilesLocation of important resourcesMailOffice camera and film usageOrdering supplies and equipment

PrivacyRating manualsRubber stampsSoliciting, writing and renewing personal and small commercial accountsPersonal/small commercial quotation workflowPersonal/small commercial new business workflowPersonal/small commercial renewal workflowSoliciting, writing and renewing large commercial accountsLarge commercial quotation workflowLarge commercial new business workflowLarge commercial renewal workflowSuspense system/expiration systemTelephoneViolent Crime Control and Law Enforcement ActVisitors/solicitations (nonbusiness-related)5. Company directoryA WORKING MODELOverviewWhat is an agency procedures manual and why do I need one?An agency procedures manual is a document which sets forth the policies and procedures your agency willfollow in handling your day-to-day insurance and office transactions. It covers such generic business operationsas how to answer the telephone, plus more insurance-oriented procedures such as processing insuranceapplications. An agency procedures manual is a vital tool for every agency, large or small. A carefully draftedprocedures manual which is consistently followed by agency personnel will not only help agencies reduceerrors and omissions exposures, but is an important training tool for new employees and a source of ensuringthe highest level of service to your customers.How to use this resource kitPIA recognizes the importance and value of a carefully drafted agency procedures manual, so as an exclusivemembership benefit, PIA has developed a guide for its members which provides valuable information on how tocreate a procedures manual which fits your agency's needs. In addition, PIA has provided sample proceduresmanual language. Since your business is unique, it is not expected nor intended that you use this samplelanguage verbatim, but only as a valuable tool to assist you in drafting a manual tailored to your own agency'sspecific needs.The manual is divided into several topic sections. A discussion of each topic is included under each section andis designed to give you information about why you might want to include this particular subject area in yourmanual and to alert you to other concerns which may be relevant. Following the discussion is a sample policywhich you may consult to develop your own.Some basic drafting do's and don'tsKeep in mind that the basic goal of a procedures manual is to establish and communicate procedures that youragency staff can follow easily. Therefore, your manual should be easy to read. To accomplish this, keep the tonepersonal.

Consider a format for your manual which can easily be revised. Since changes in staff, rules and procedures arelikely to occur, manuals should be capable of modification without having to reprint it in its entirety. A looseleaf format may be conducive to easy revisions.Diary a regular annual review of your procedures manual and assign responsibility for this function. In addition,use the training of new employees as a reality check. Ask trainers and new employees to identify any areaswhere actual agency practices are diverged from those in your manual, and adjust the manual accordingly.1. IntroductionAn introduction to the purpose of your agency's procedures manual should be provided so employeesunderstand its function and importance. In the introduction you can outline the main sections which are coveredin your manual.Sample introductionThe insurance industry is a business that is interesting, fascinating, constantly changing and growing.Those of us who represent the industry look upon ourselves as being committed to a service-orientedprofession. Rather than being 9-to-5 job holders, we are traveling along exciting career paths andproviding financial protection that can make a real difference in people's lives.Welcome to the (agency name). This manual has been designed so you can understand our policies andmanagement objectives. It will enable you to take part in the team effort necessary to operate ouragency. Our future is dependent on all individual efforts, working together toward our definite purpose.This agency's success depends on clearly defined goals and a commitment to the activities specificallydesigned to meet those goals. As a result, it is necessary to establish procedures that must be followedand a method to monitor these procedures so we know if we are "on the right track." It is theresponsibility of each of us to learn, understand and adhere to these policies so we can provide prompt,accurate, courteous service to our clients, company people and each other, while achieving personalsuccess in the process.The manual is divided into the following sections: introduction;agency mission statement;organizational structure of our agency;policies and procedures (listed alphabetically by topic); andcompany directory.We urge you to share any ideas you might have for improving any procedure set forth in this manual.2. Agency mission statementMany businesses have developed a mission statement. A mission statement sets forth the goals and objectives ofyour agency, as well as your agency's business philosophy.

Sample mission statement(Agency name) is a professional organization dedicated to providing the best insurance protection at themost reasonable price to as many people and businesses as possible.TO PROVIDE our clients with the best possible educated and knowledgeable, personal service in orderto keep them as long-term, satisfied customers.TO MAINTAIN a professional and efficient work environment which helps each person to achieve hisor her personal goals.TO DEAL with the public fairly and honestly and to be a respected member of the community.TO EARN a profit which fuels progress and provides each of us a desirable income.TO EARN a profit for and do the best job possible for the insurance companies we represent.3. Organizational structure of agencyAgency backgroundIn order to help orient new employees, a section in a procedures manual which provides some backgroundinformation on your agency is very helpful. Employees want and need to know about the structure and nature ofyour organization. This information will give them "the big picture" about the organization in which they areemployed.Sample agency backgroundAgency history(Agency name) was founded by (founder's name) in (year). From our beginning in (location) we haveenjoyed a steady growth over the years and have become recognized as one of the leading agencies inthe area. We have earned our reputation for professionalism due to the special attention we give to theneeds, requirements, and details of our clients.Nature of agencyAn insurance agency is a service-oriented entity that represents one or more insurance companies, forwhich it sells insurance policies (written contracts between individuals and companies, providingprotection against the possibility of loss).The amount paid by the insured (person who is protected by insurance) is called the premium.The insurance agent or member of the agency staff generally completes an application containinginformation on the insured, which then is submitted to an insurance company for approval.The company, in turn, issues a policy, which lists what is covered by insurance, provided the insuredcomplies with certain conditions outlined in the policy, and what is not covered (exclusions).The insurance agent is responsible for the collection of the premium, except when the premium is billeddirectly by the insurance company (this is called direct-billing). The insurance agency receives apercentage of the premium (commission) as pay for its services. When the insurance agency isresponsible for collecting the premium, (this is called agency-billing) the agent often retains thecommission percentage and is responsible to forward the remaining premium to the insurance company.(This may vary depending on each particular company practice.)

Type of business entity(Name of agency) operates as a ( ) corporation, ( ) sole proprietorship, ( ) partnership, ( ) limited liabilitycompany, under the Laws of the state of (state). The agency also holds insurance licenses in (states).LocationsThe main office is located in (location). We also operate branch offices in (insert all locations).Owners, officers, directorsThe names and titles of all shareholders, officers and directors (if a corporation), partners, (if apartnership) or members and managers (if a limited liability company) and any sublicensees listed on theorganization's license should be inserted here. Be sure to include both active and inactive names with anote as to the ones who are inactive. (For instance, the senior partner has retired, but is still an owner. Heshould be listed as an inactive owner, so that a new employee will understand his status.)Profile of agency personnelTo help all your staff better understand how your agency operates, it is useful to include a listing of the differentjob positions in your agency. This is one particular area of your manual which may be likely to change as youragency changes over time.Sample profile of agency personnelPersonal lines customer service representative: The personal lines CSR provides service to personallines accounts (personal insurance for clients such as, but not limited to, personal automobile,homeowners, boats, umbrellas, etc.) including assisting customers in making coverage changes andinforming and educating clients about policy coverages and insurance needs. The personal lines CSRmust be familiar with company guidelines and underwriting, knowledgeable in personal lines coveragesand also must maintain a good rapport with clients and company underwriters. The personal lines CSRassists producers in soliciting new business and developing existing accounts.Commercial lines customer service representative: The commercial lines CSR services commercial linesaccounts including assisting customers in making coverage changes and informing and educating clientsabout policy coverages and insurance needs. The commercial lines CSR must be familiar with companyguidelines and underwriting, knowledgeable in commercial lines coverages and also must maintain agood rapport with clients and company underwriters. The commercial lines CSR assists producers insoliciting new business and developing existing accounts.Personal lines manager: Oversees and manages all agency personal lines operations, including financial,sales and service operations. Is responsible for human resource management of the personal linespersonnel.Commercial lines manager: Oversees and manages all agency commercial lines operations, includingfinancial, sales and service operations. Is responsible for human resource management of thecommercial lines personnel.Claims representative: The claims representative provides clients and third parties with assistance inreporting and settling both personal and commercial lines claims. The claims representative works withour insurance carriers to assist the company with its claims activities.Accountant/bookkeeper: The accountant/bookkeeper accurately processes the daily financialtransactions of the agency (including premium billing and collection) and maintains complete andaccurate financial records for the agency, monitors delinquent accounts, and answers customers'

questions regarding billing issues.Receptionist/secretary: This position is very consumer-oriented. The receptionist/secretary is in constantcontact with insureds and other members of the community. Frequently, the receptionist gives the publicits first impression of the agency. Besides the technical skills required for the job, an outgoing andfriendly personality is a must.Commercial lines producer: This is a sales-oriented position requiring advanced communication skills, athorough knowledge of the commercial lines insurance products available through this agency, andproven ability to pursue and close sales. The producer actively solicits new commercial lines accountsand provides service to existing accounts.Personal lines producer: This is a sales-oriented position requiring advanced communication skills, athorough knowledge of the personal lines insurance products available through this agency, and provenability to pursue and close sales. The producer actively solicits new personal lines accounts and providesservice to existing accounts.Organizational chartLike your agency's background and the profile of agency personnel, an organizational chart can help employeesunderstand how your agency operates. An organizational chart which clearly identifies supervisors andmanagers provides vital information on which employees report to whom.Keep in mind when creating your organizational chart that many agency personnel are responsible for morethan one job function. Your chart should reflect these dual roles.Sample organizational chartProfessional associations to which agency belongsYou may wish to include a list of the names, addresses and telephone numbers of the professional associationsto which our agency belongs. Employees often can obtain vital resources from these professional associations.Sample professional associations list: (Any associations that the agency belongs to should be listed.)Professional Insurance Agents of Florida Inc.25 Chamberlain St.1390 Timberlane RoadTallahassee, FL 32312Telephone: (800) 277-2271Fax: (850) 893-8316Email : [email protected] address: www.piafl.orgNational Association of Professional Insurance Agents400 N. Washington St.Alexandria, VA 22314Telephone: (703) 836-9340Fax: (703) 836-4933E-mail: [email protected] address:

4. Office proceduresActivities requiring licensureUnlicensed personnel should understand what insurance activities cannot be undertaken without a license sothat your agency is not exposed to disciplinary action. To ensure employees understand what activities require alicense, you may wish to include your state's law on this subject.Licensing lawsThe Florida Department of Financial Services (DFS) offers a number of licenses for Florida residents, aswell as nonresident equivalents for many of them. You can see a list of all the resident and nonresidentagent and adjuster licenses available in Florida.The major resident licenses include the General Lines (2-20) license, which is the broadest propertycasualty agent's license, and the Life, Health & Variable Annuity (2-15) license, which is the broadest inthe life-health category.Because unlicensed employees are not allowed to discuss coverages or sell insurance, DFS offerslicenses designed for customer service representatives (CSRs) who don’t do outside sales but do discusscoverages with clients and may solicit insurance from within the office. The Customer Representative(4-40) license is intended for an agency CSR and is more limited than the 2-20 in various ways, theprimary one being that a 4-40 must act under the authority of a 2-20 "supervising agent.” The LimitedCustomer Representative (4-42) is similar to the 4-40, but is limited to personal auto insurance.In 2004 DFS introduced the Personal Lines Only (20-44) agent's license as an alternative to the 2-20.This license enables the licensee to act as a full-fledged agent but only for personal lines of insurance,such as homeowners and personal auto.There are several limited life-health licenses available, the main ones being the Life & Variable Annuity(2-14) license, and the Health-only (2-40) license.Although the 2-20 is primarily a property-casualty license, it includes a qualification for healthinsurance so, if someone with a 2-20 obtains an appointment from a health insurance carrier, DFS willautomatically issue them a 2-40 license without their having to take another licensing class or exam.Most of the major licenses (including all of those mentioned above) require passing an exam, but someof the more limited licenses do not require one.For most of the Florida resident licenses, a new resident can qualify for “transfer of license” if they’veheld the same type of license for at least a year in their previous home state, and they apply for theirFlorida license within 90 days of moving here. They’ll have to meet various requirements includingproviding a “letter of clearance” from their previous state. Find out more at the DFS website.It is important that unlicensed personnel understand the types of activities in which they may notperform without an insurance producer's license. So that our agency does not violate any insurancelicensing laws, we have set forth the pertinent laws of our state which discuss the types of activitieswhich require licensure. If you have any questions whether you may engage in a particular activitywithout a license, you should speak with your supervisor.

Agency formsAgencies often perform functions which require the use of forms. Additionally, agencies often correspond withcustomers on similar issues which lend themselves to the use of form letters. Your agency may have developedform letters to be used for certain purposes and may use standardized forms for particular functions. You maywish to include your policy on the use of forms and form letters in your procedures manual.Sample forms policyYou should utilize the ACORD forms whenever possible. In addition, our agency has developed formsand form letters for use in the following circumstances: welcoming new customers to the agency;requesting additional information;acknowledging receipt of a claim;broker of record letters;acknowledging a policy change; andrecommending coverages.Samples of these form letters are provided in the manual's appendix. Developing new forms or formletters unique to the agency is encouraged where you identify a need; these must be approved by yourmanager before use.AuditsA policy on the processing of audits may be included in your manual.Sample audit policyAn audit is the final premium calculation made on certain types of policies (i.e., general liability,workers' compensation, etc.). These policies are issued initially with a deposit premium determined byestimated payroll, sales receipts or some other unit basis, and the audit determines the final premium tobe paid by the insured.The audit must be reviewed within twenty-four (24) hours of receipt in the office and any requiredpremium billing to the insured must leave our office within two (2) working days.Check the appropriate insurance company contract or guidelines to determine how each companyrequires us to handle uncollectible audits. Some companies allow us to turn over uncollectible audits tothem within thirty (30) days without any obligation to our agency. Therefore, it is imperative that anappropriate suspense be placed on the collection of audits.Uncollectible audits must be discussed with management prior to returning them to the insurancecompany. Documentation should be maintained on the date uncollectible audits are returned to thecompany.BindersSince binders are proof that coverage has been effected and, in fact, are contracts of insurance, a policy onissuing binders is important information to be included in your procedures manual.

Sample binder issuance policyA binder is evidence of temporary coverage authorized by the agency until such time as the policy isissued by the insurer and received by the agency. A copy of the binder must go to the insurancecompany and the insured on the date of issue. The binder must be recorded in the binder log, suspendedfor expiration, and reissued, if necessary. The binder log is a form we use to record and control thedisposition of binders. A binder is given a numerical assignment and listed in the log, which helps uskeep track of the expiration dates of all binders issued. Binders shall not be issued for any company forwhich you have no contract or for which you have no binding authority. Care must be taken not to issuea binder in excess of the binding authority granted in the company contract. If you have any questionson binding authority for any given company, consult (designated person).Invoices shall be issued for the estimated premium to be delivered with the binder. Remember, thebinder is proof of the coverage which the insured has purchased.Business hoursThe normal business hours of your office is an important piece of information for employees. Since the startingand finishing times for your exempt employees will probably not be the same as for your nonexemptemployees, a general statement of office hours will suffice. You may include more detailed information in youremployee handbook or personnel manual.Sample business hoursOur normal offices hours are from a.m. to p.m., Monday through Friday. The time betweenand is known as "quiet time." This time is set aside for all employees to organize their day andthey shall not begin to receive telephone calls or visitors until . Any employee needing "quiet time"at other times of a day may get approval from (designated person). This is very valuable time and shouldnot be abused by employees by wasting time talking among each other.Cancellation and/or nonrenewal follow-upYour agency should adopt a procedure for contacting insureds to discuss replacement coverage when acompany sends a customer a cancellation or nonrenewal notice.Some agencies have even adopted procedures for contacting insureds to remind them to pay the premium whenthe company issues a cancellation notice for nonpayment of premium. While there may be many valid businessreasons for adopting such a procedure, such a practice also raises errors and omissions concerns in instanceswhere the practice is not consistently followed. For example, a customer may begin to rely upon his agent'sreminders to pay a premium. If the agency either decides to stop sending reminders, or forgets to send areminder, and the customer is canceled and suffers a subsequent loss, the agency could be exposed to an errorsand omissions claim.Therefore, an agency should carefully consider whether to adopt such a practice and if it does, the practiceshould be consistently followed.Sample cancellation and/or nonrenewal follow-upWhen the agency receives notice that a carrier is going to cancel or nonrenew one of our customer'saccounts, (designated person) should immediately attempt to contact the insured to discuss replacementcoverage. Once contact is made, a follow-up letter should be sent to the insured indicating the course of

action which was agreed upon (i.e., agency will effect replacement coverage with "X" company,customer indicated that replacement coverage has already been effected by another agency, etc.) If theinsured cannot be contacted by telephone within one day of agency receiving the cancellation ornonrenewal notice, the agency should immediately send a letter to the insured indicating that the agencyis searching for replacement coverage, or if appropriate, that replacement coverage has been found with"X" company for a particular premium, and that the insured should immediately call the agency todiscuss the matter. You should note in this letter that while you are attempting to find replacementcoverage, the agency cannot guarantee that it will be able to find such coverage. If replacement coveragecannot be found, the insured should be notified in writing.Certificates of insuranceImproperly issued certificates of insurance are fertile ground for an errors and omissions claim. It is importantthat your employees understand the purpose of certificates of insurance and the rules pertaining to theirissuance.Sample certificates of insurance procedureA certificate of insurance is a representation of policy coverage to the certificate holder. As such, it isimperative that all information conveyed be accurate and that the standard ACORD form, withoutmodification, be used. Any deviation from this language or additional requests must be approved by thespecific company and properly endorsed upon the policy. The completed certificate of insurance shouldbe mailed to the certificate holder with a cover letter explaining the purpose of the certificate. Copies ofthe certificate also should be sent to the insured and the insurance company. One copy of the certificateshould be kept in the customer's file and should be recorded in the policy certification log. This logrecords all the certificates issued for a particular insured, summarizes the information contained in thecertificate, and identifies several important items to check when issuing renewals.Claims processing chartSample claims processing flowchartCorrespondencePreparing correspondence is an important part of the daily operations of an agency. Correspondence often is theonly contact (other than the telephone) that the agency has with the insured. Therefore, it is vitally important tocreate a professional image of the agency in any correspondence you send out.Sample correspondence policyAll correspondence should be brief, but friendly, legible, grammatically correct and dated. All lettersshould be prepared on agency letterhead. A copy should be retained for the permanent file. Allcorrespondence, other than interoffice communications, must be typewritten. The agency's establishedform letters should be used where appropriate.Customer office visitsYou may wish to include a policy on how employees should handle customer visits. While the receptionist willgenerally greet visitors, your entire staff should be aware of this policy in case the receptionist is not availableto handle visitors.Sample customer office visits policy

Greeting customers:Always greet customers with a smile and inquire how you can help them.Before directing a visitor to someone's office, call the person to be visited to 1) obtain clearance, and/or2) let the agency representative know that someone is coming to call. Then walk visitor to office (orhave him/her wait for escort).Handling simultaneous customer visits and telephone calls:When you are busy with a call and a visitor arrives, acknowledge the visitor's presence by greetinghim/her with a smile and a nod to indicate that you will be with him/her as soon as you have finishedyour call.When meeting with a visitor, phone calls should not interrupt your conversation, if possible. However, ifyou must answer the call, excuse yourself first and make the phone conversation as brief as possible.Attempt to call any callers back if a visitor is present.Customer relations creedYou may wish to include a customer relations creed to emphasize the importance and role of customer relations.Sample customer relations creedYOU provide a valuable service as an intermediary between the insurance agency and those representingits companies. In addition to keeping the lines of communication open between you and company fieldpersons, adjusters and underwriters, YOU also do your part in underwriting at the agency level.YOU pay careful attention to filling out applications, attaching the necessary documents, bindingcoverage, and following the rules and policies of each company represented in the agency.YOU serve as a positive liaison between the agency and its insureds (customers). Keeping in mind thatthe insured is the person who is responsible for the agency staying in business, you as the person mostoften contacted serve each customer with the personal attention he/she deserves.YOUR attitude is one of friendly helpfulness, enthusiasm and patience even with those difficult ordistraught insureds who enable you to draw upon your inner strength in a professional manner, withoutlosing control of your poise.YOU understand the value of the insurance industry. In a personal, one-to-one move to improve theimage of the industry in the minds of the public, you pass along this understanding of the industry'scontribution to the economic development of the nation, and to the peace of mind of individual andbusiness insureds.Please do not become so preoccupied with agency systems and procedures that you forget why we arehere. OUR INSUREDS ARE THE AGENCY'S MAIN CONCERN. Please treat them with courtesy andalways with a professional attitude.Sincerity and a friendly smile are effective ways of continuing your insured's (customer's) trust in youand will encourage them to refer others to the agency. This is how the agency grows, providing jobsecurity for you and others. (Speak up if rudeness is observed.)

EndorsementsA procedure for the processing of policy endorsements is an important procedures manual topic.Sample endorsements policyAn endorsement is a written amendment to an existing insurance policy. Any request to an insurancecompany to endorse or change a policy must be suspended to insure receipt. Additionally, a letter shouldbe sent to the insured confirming that a policy change was requested and is being processed.When an endorsement is received from the insurance company, it should be verified for accuracy, andany appropriate premium differences billed immediately if it is an agency-billed account.Premiums developed by endorsements are collected in accordance with the appropriate insurancecompany's contract or guidelines.Errors and omissions insuranceIf your agency maintains an errors and omissions liability policy, you may wish to include generic informationregarding this policy, as well as a procedure for reporting actual or potential liability claims.Sample

Personal lines customer service representative: The personal lines CSR provides service to personal lines accounts (personal insurance for clients such as, but not limited to, personal automobile, homeowners, boats, umbrellas, etc.) inc