Rollover communication error lands BrokerLink in hot water

BrokerLink in Alberta got some unwanted regulatory attention after failing to inform a client about a rollover agreement the brokerage had made with a new insurer on behalf of a farm insurance client.

As is common in P&C insurance, when a brokerage terminates a contract with an insurer, it enters into a “rollover agreement” with a new carrier. In such an agreement, the new carrier promises to insure the clients of the terminated insurer until renewal. This is to make sure the clients under the former insurer are covered after the cancellation.

BrokerLink told the regulator its policy is to notify its clients of any such rollover agreement. However, in this particular matter, it did not do so, according to regulatory documents. This mistake, which the brokerage described as unintentional, inadvertently led to a cascade of awkward communications that confused and angered one of the brokerage’s clients.

The client ultimately went with a new brokerage to place their expiring farm insurance policy, making a formal complaint to the regulator.

In its decision on the matter, the Insurance Council of Alberta found BrokerLink’s error had misled the client, a breach of the Code of Conduct punishable by a fine of up to $1,000. However, the regulator elected not to fine the brokerage based on mitigating circumstances.

“Unfortunately, we did not take action immediately in order to get this renewal issued in the standard expected 45 days prior to renewal date,” BrokerLink said in correspondence to the regulator. “Nor did we send out our standard conversion letter.

“We have since amended our rollover workflow to add in a double check for any file that doesn’t meet this 45-day threshold.”

Alberta’s regulator received the client’s complaint on Jan. 3, 2023. The client was concerned about not hearing from the brokerage about the annual renewal of their farm insurance policy. The policy typically renewed annually on Dec. 20.

On Dec. 14, 2022, the client wrote an email to BrokerLink’s account manager to express disappointment with the lack of communication.

The BrokerLink account executive sought out five quotations and presented the client with a last-minute quote on Dec. 20. The client indicated an intention to use a different brokerage to place their business.

Then things got confusing.

Two days after the expiry of the renewal period, on Dec. 22, 2022, the client received an “urgent” emailed notice from the brokerage requiring that the client sign papers to cancel an existing policy with an unfamiliar insurer.

“These emails were alarming to us,” the complainants wrote back to the brokerage on the same day. “We were not clients of [the Insurer]….I think someone in your company has a lot of explaining to do.”

Related: Don’t forget to make sure your client’s policy is in force

The client refused to sign to cancel a policy to which the client had never agreed in the first place. They insisted on speaking to a BrokerLink manager. A branch manager talked to the client on Dec. 23.

According to the complainants, the branch manager informed them the insurer required the client to sign that the insurance was cancelled or else the policy would remain in place. The branch manager also said the client would be sent to collections for the cost of the policy if they did not sign the cancellation policy.

But after hearing the client’s concerns, on Dec. 23, 2022, BrokerLink sent the following email to the new insurer:

“So we have an issue with this one – originally [the policy of the former insurer] was declined [by the new insurer after the conversion] because we didn’t have all the info. We got the info at the 11th hour and sent it in, and the policy was issued. Turns out now the client doesn’t want the renewal and had actually sought out another policy, they are also refusing to sign a cancellation. Can we flat cancel this one – […]

“The communication at our end with the client on the rollover process was not good and has resulted in this confusion. The error definitely lies with us on this one.”

The insurer agreed to flat cancel the policy without a signature. BrokerLink explained to the regulator that the new insurer’s direct bill renewal documents were already in the mail before the client indicated it would be going with a new brokerage on Dec. 21, 2022.

“When they received the renewal documents, the insureds were obviously concerned as they [now] technically had two policies in place and they subsequently requested that [BrokerLink] void the [new insurer’s] policy,” as the brokerage explained.

BrokerLink confirmed to the regulator this was an isolated incident of miscommunication.

The regulator opted not to issue a fine because BrokerLink had:

• made a rollover arrangement when it terminated its contract with the former insurer of the client;
• sent the client a quote on Dec. 20; and
• arranged to have the policy flat-cancelled without the client’s signature.

 

Feature image courtesy of iStock.com/ilkercelik