Author: VU Faculty

We were recently asked our opinion about whether personal lines CSRs could also handle small business accounts written on BOPs. While some CSRs can make the transition, it is fraught with perils. Find out what the VU experts think about the realistic expectations of such a change.

"We want to know if you have any feedback on using a personal lines CSR to write BOPs. We would like to get any remarks from agent(s) that may have done this or are doing this. We're considering letting our personal lines staff handle small commercial accounts and wondered what the pitfalls might be."

There are agencies that have tried this..both successfully and unsuccessfully. Depending on your staff and their training, it's doable, but it may not be as easy as you think. We ran this by the VU faculty and their responses are below. In addition, we're soliciting input from agencies with experience in this area and will add their comments as received.


I think a lot of people equate personal lines and small commercial as about the same thing...something a personal lines CSR can easily handle. The truth is that, while there are some similarities, there's a lot to learn about small commercial and BOPs. The list of coverages and exposures is long and I won't go into detail here. Can a personal lines CSR sell and service a BOP?  Sure, some of them can, but only after the proper training.


When I was in an agency, we developed a "small business unit"...this unit did personal lines and small commercial. The key is proper training. There are new exposures here that personal lines folks aren't used to.

I'm assumimg that the CSR will be given the BOP account by the producer, who has thoughly reviewed the insured's exposures to be certain the BOP is the correct policy, as opposed to the CPP, that all correct endorsements have been used, and where there is no BOP endorsement available, the account has also been quoted on a CPP where the are many more endorsements for tailoring the coverage. I'm also assuming that auto coverage has been placed in a commercial policy or, if H&NO is used, it has clearly been explained to the insured. I'm assuming that the account will be monitored by the fully cross-trained CSR.
 
There should be NO problems UNLESS:
 
1.  At renewal, the CSR is not familiar with EVERY difference in EVERY BOP the agency handles to be sure that the current BOP is still adequate.
 
2.  The CSR is totally familiar with the exposures presented by a commercial client such as TIB coverage—where the insured installs TIB during the policy year and calls in to be sure they are covered. Or what to do IMMEDIATELY if there is H&NO auto when the insured calls to report they bought a truck—last week!!
 
3.  The CSR does not go to at least one seminar a year on the BOP. The ISO forms will change again 1-1-2006 in most states. All the 2004 CPP Additional Insured changes will be made at that time. Including the "auto" vs "mobile equipment" mess. I know that can be explained by the CSR.
 
Of course if the CSR can do all this they should be promoted to PRODUCER!


We do not use personal lines assistants to work on commercial, nor do we normally have commercial lines people work on personal lines. Each area has its own expertise. Most people cannot stay current on the issues of both.


I strongly oppose using personal lines CSRs to handle BOP or other small commercial business. The coverage found in a BOP or other small business policy is no less complex than a much larger commercial accounts with CGL, property and crime exposures. There are simply smaller property and crime figures.
 
Many BOP accounts—if not the large majority—lease space and have quite complex contractual obligations. A personal lines CSR has no experience in lease issues. Most producers don't even know what to look for.
 
I have had the unfortunate experience to read several depositions following a coverage dispute, and a subsequent E&O lawsuit against an agency, where a personal lines CSR had been handling BOP or small package business. The depositions were simply terrible. The plaintiff attorneys quickly discovered the CSR was not conversant in commercial insurance and the defense was sunk.

In my illustrious agency experience, we never had a personal lines CSR handle BOPs for the obvious reason...they do not know commercial lines. Having said that, is this a situation where the agency is planning to take a personal lines CSR and train him/her to do nothing but BOPs?  That may work. But, if they are planning to have the CSR to do personal lines and BOPs, that has E&O written all over it, especially in the beginning.
 
As you are well, aware many agencies do not think much of that policy. The problem claims usually arise from not selling the policy from the top down. That is, as most BOP formats have optional limits on the 'fringe' coverage (valuable papers, for example), not offering the maximum limits available for those coverages at point of sale. Plus, as most BOP insureds are tenants, no one reads their lease to see if the optional coverage should apply, such as signs, glass or mechanical breakdown. Most personal lines CSRs would not know to ask.
 
Now, it may be that this agency just does not have a choice, which is common in the smaller agencies. If that is the case, then the CSR needs to learn and know the BOP programs of the carriers the agency plans on using.

In my opinion anyone can help anyone. The question is the skills of the person and whether the CSR can learn what is necessary to handle a BOP.

Larger agencies I work with have been shifting smaller business customers (many that fit a BOP) to the personal lines department. The reasoning behind the shift is that the same types of services requested by personal customers are required for the small commercial accounts (e.g., billing questions). I do a lot of on-site training for personal lines CSRs who are making the transition to small commercial lines accounts. I find that most agencies set up a separate unit for these "hybrid" CSRs who do more than just process. They handle both personal and commercial accounts and report to both personal and commercial lines supervisor/managers. The CSRs that take part in this transition usually are seasoned personal lines CSRs and they love the opportunity and challenge of the change.

Why open yourself to more E&O? By selling BOPs as the one-size fits all exposure to small businesses, we already have a great E&O exposure. Restricting it to personal lines CSRs expands the exposure if the CSR's are not properly trained to identify the exposures that warrant a move to the CPP and monoline programs.

I understand the concept of the BOPs not having sufficient premium/commission to warrant full service, but the courts do not recognize a difference in professional obligations and duties based on compensation size.

I am not aware of any licensing issues that would prevent someone from handling both Personal Lines and Commercial Lines. Barring none, and assuming that this CSR is licensed with the proper skills, all that would be needed is to properly train the CSR.

It can be done, but I question how effectively and at what risk. Already too many commercial accounts are put on BOPs when the insured would be better served under a CPP. I see all the time where claims arise under a BOP where there is no built-in coverage, but the coverage could have been provided as an option under a CPP. If a commercial lines producer or CSR cannot figure out when a CPP is superior to a BOP, how is a personal lines CSR supposed to know?
 
Again, I think it can be done, but not without SIGNIFICANT training...and I think most existing commercial lines staff are woefully undertrained to do their jobs effectively.

I'm sure there are agencies that do this but it seems like a bad idea. Do the personal lines CSR's understand commercial coverages? In my experience this is not the case. I believe BOPs present a large E&O exposure—not for what they cover, but for what they don't cover that could have been covered under a CPP.

Do you have an opinion? Feel free to email your thoughts, opinions and suggestions to Bill.Wilson@iiaba.net and we'll post them here:

What a sanctimonious bunch of responses...doesn’t everyone know that commercial lines people are superior and smarter than personal lines people—NOT.  Since our clients take independent actions without regard to exposures being personal lines, commercial lines, or life, accident and health, we as their risk managers must be better informed and trained to recognize, identify, discuss, ask, and ultimately provide solutions to manage risk.  To departmentalize clients and employees and wash out hands of those exposures outside our department is where the true E&O risk and disservice to the public lies.  Everyone dealing with clients needs to have the general knowledge of exposures to identify that gaps may exist and seek out appropriate solutions.  The true risk manager does not think personal lines or commercial lines, but how do I manage my client’s risk. This is why continued training is always essential and what makes insurance fun.