Are Your Agency’s Employees Engaged?

About 10 days ago, the Atlanta Journal Constitution published its annual ranking of the top places to work in the Metro Atlanta area.  Two years ago J. Smith Lanier & Co. was ranked in the top 5 midsize business places to work and this year was ranked 13th in that group. (Click here for my blog post in 2013.)  Congratulations are due to it for maintaining its status as a top workplace.  As was the case in 2013, no other independent insurance agencies were ranked and there were no insurance companies anywhere to be found.

What most interested me were the results of a survey that the AJC gave the employees of the top ranked workplaces to find out what was most important to them about where they worked.  The three most important factors cited by those employees all had to do with the feeling of connection between them and their employer.  The most important factor was feeling genuinely appreciated by their employer, followed closely by a feeling of confidence about their future at work and that their employer was going in the right direction.  To my surprise, the two things that were least important to these employees were feeling that their pay was fair for the work they did (cited by only 51%) and bringing up the rear, feeling that their benefits package was good compared to similar companies (cited by only 37%).

Engagement is the buzzword in human resources circles for creating a connection between the employee and employer.  A recent survey of employees found that over 68% of them self-identified as being disengaged at work.  Other studies show that disengaged employees are not as productive as employees who feel engaged at work and by some estimates cost the American economy $550 billion a year as a result.

In addition to productivity loss, disengaged employees can negatively affect office morale and generally do not provide the type of customer service that is needed in today’s economic environment to distinguish your insurance agency from everyone else.  From the above description of the negative effects that disengaged employees can have on a workplace, it should not be hard to figure out which employees in your agency may be disengaged.

Three general rules for creating a workplace of engaged employees are:  1) listen to them, especially about problems they may see and suggestions they may have for improvements in workflow and other office procedures; 2) encourage them to work together to solve the problems that may exist and advance the goals of the agency; and 3) give them regular feedback on their performance, praise where warranted and constructive criticism where necessary.  The key here as in most areas of life is regular and honest two-way communication.

For an article on seven actions that can be taken to implement the above general rules, click here.  For those who want more information, click here to register for a free one hour webinar on creating an engaged workforce that will be held next week on April 8 at 1 p.m.  Finally, if you are looking for suggestions on how to use reward and recognition to boost the productivity of your agency’s employees, click here to download a free booklet on that subject.

Authority to Make Changes to an Insurance Policy – Part II

I have been informed that my post last week generated a comment on IIAG’s Facebook page.  That comment made a valid point that I neglected to make in my post, but also expressed an attitude that may be shared by many other agents, which attitude I think could cause problems for the agent in some situations.

The point made that I neglected to make was that, if the language of an insurance policy states who is authorized to make changes to it, then that language will control in the absence of any statute or regulation to the contrary.  The same principle applies to any questions that may arise about an insurance policy.  My post last week addressed the situation in which the policy does not contain any language about who is authorized to make changes to its coverages.

The person who posted the Facebook comment went on to say that agents should advise their customers to look out for themselves in the divorce situation that I used as an example in last week’s post.  Georgia law does presume that an insured has read their policy and therefore, understands what coverages and other rights they have under it.

However, as noted in an earlier blog post, an agent may well have a duty to an insured that goes beyond just obtaining the type of insurance coverage requested by the insured and leaving it up to the insured to take care of themselves after that.  An agent’s words, conduct, or both can give rise to duties to the insured that go beyond those of a mere order taker.  In the context of a family personal lines insurance policy, an agent who is trying to provide “added value” to the family can easily say or do things that would lead the husband and wife to reasonably believe that they both have control over what happens to that policy.

I think an agent will expose themselves to potential liability if they are aware of a divorce proceeding and do not at least ask the spouse requesting a change in the insurance policy if there has been an order entered in the proceeding that addresses what can be done with the policy in question.  In the absence of any attempt by the agent to make such a determination and the occurrence of a subsequent uninsured event involving the other spouse, the agent can expect to be sued for negligent performance of their duty to the other spouse, who was a named insured.  It will then be up to the agent to explain to a jury why it was unreasonable to expect them to make any effort to determine whether the requesting spouse had the authority to request the change in question.  The agent may win in the end, but at the cost of significant time and expense that could have been avoided by asking a simple question. 


Who Can Make Changes to an Insurance Policy?

The above question arose out of a call that I recently received on the Free Legal Service Program that I run for the IIAG.  The caller had been directed by one spouse who was involved in a contentious divorce proceeding to delete the other spouse and their child from a motor vehicle insurance policy on which the requesting spouse was the named insured.  I did not have to give my opinion on whether that could be done because an order had been entered in the divorce proceeding that prohibited any changes in existing insurance coverages pending the outcome of that proceeding. The question posed by the caller and my response will be the subject of a future blog post.

The above call caused me to start thinking about what an agent’s duty would be in the situation described above where no court order had been entered.  Given that almost half of all marriages end in divorce, agents are probably put in such situations on a regular basis.  A quick search of the Georgia Insurance Code and case law did not reveal any statute or appellate court decision that directly addressed the above question.  The closest statute I could find was the one that governs how an “insured” can cancel an insurance policy.

If the “insured” can cancel an insurance policy, it is logical to assume that they can ask that changes be made to it.  Unfortunately, that statute does contain any definition for the “insured.”  In practice, most agents (and I) would assume that the “insured” who can cancel the policy is the named insured on the policy.  Where there is more than one such named insured, the question arises whether all such named insureds must agree to any changes in the policy.  I don’t know the answer to that question, but I think it is clear that one named insured cannot do anything that would change the coverage available to the other named insured(s) without their consent.

This would be helpful in the context of spouses involved in divorce proceedings if they are both considered to be the named insured on the policy in question.  If not, I would advise that an agent refuse to make any changes requested by the named insured spouse, where the agent is aware of divorce proceedings having been commenced, without first finding out if any order has been entered in the proceeding that would prohibit such changes being made.  If no such order has been entered, the agent should document the steps taken to make that determination and that the changes requested were made only after those steps were taken.

I welcome comments from my readers about their experiences with the above situation and how they have handled similar requests.




Does an Insured Have a Right to Obtain Copies of the Documents in Their File?

A client of mine recently asked a really good question to which I cannot give a very good answer.  His question was what right does an insured have to get copies of the documents in his agency’s file for the insured.  I am not aware of any law or regulation that specifically addresses this question, except with respect to any documents that may contain information covered by the Health Insurance Portability and Accountability Act, commonly known as HIPAA.  That Act imposes obligations on those who have such information in their files that are beyond the scope of this post.  Those of my readers who are members of IIAG and thus, members of IIABA, can go to the IIABA’s members only section and find more information on those obligations under Legal Advocacy, Memoranda and FAQs.   My other readers can find such information on a blog found here.

For all other documents found in an agency’s files for their insureds, we are left with the general principle that an agent is considered to be the agent of the insurance company first.  As such, he or she owes no duties to an insured, other than to obtain the policy requested by the insured and by extension, any documents created by the agent during the course of obtaining such policy would belong to the agent and/or insurance company that issued the policy.  This same rule would apply to any documents acquired by the agent during the course of obtaining the insurance policy requested, except for those documents that were supplied by the insured.

As noted in an earlier blog post, under Georgia law, by his or her words or conduct an agent can create duties to an insured that do not exist otherwise.  That same principle would apply to the documents in an insured’s file.  If the agent by words or conduct leads an insured to believe that the documents in the agent’s file for the insured belong to the insured or that the insured will be able to get a copy of any such documents upon their request, the agent would have created a duty to the insured to provide copies of all such documents upon the insured’s request.

This principle can also work the other way.  If the agent informs the insured at the beginning of the relationship that any documents created or obtained by the agent during the course of providing services for the insured will belong to the agent and that the insured has no right to obtain copies of them, that rule will govern the relationship.  In any event, there is nothing to prevent an agent from charging a reasonable fee for making copies of any documents requested by the insured that the insured either has a right to obtain or that an agent agrees to provide.

So the answer to the above question is that it depends on the type of document being requested and on whether the agent has established a policy about the provision of copies of the documents in their file for an insured, either one way or the other.  If not and the document requested was not one that had been provided by the insured initially, then the default rule would be that an agent has no obligation to provide an insured with copies of documents in their file for the insured.



Which Agency Employees Can Be Exempt Employees for Overtime Pay Purposes?

In last week’s post, I mentioned the concept of exempt and nonexempt employees and provided a brief description of what makes an employee exempt from the requirement under the Fair Labor Standards Act (“FLSA”) that employees be paid extra compensation for any work done in excess of 40 hours per week.  This subject is an important one, as the misclassification of an employee as being exempt when in fact they are not can be very costly to the employer, as explained later in this post.

A few weeks ago, I listened to a webinar that focused on whether certain employees of insurance agencies could be classified as exempt employees.  In particular, what it would take for customer service representatives, or account executives, and producers to be classified as exempt employees.  The presenter discussed in some detail the two main exempt categories that may apply to the former type of employees, known as the executive and administrative employee exemptions.  As noted in last week’s post, at this time, to qualify for either exemption an employee must be paid on a fixed salary basis in an amount that equals at least $455 per week ($23,660 per year) and that salary cannot be reduced based on the quality or quantity of the work performed by the employee during any one work week.

I say at this time because, at the direction of President Obama, the Department of Labor has been reviewing those and the other exemptions from the overtime pay requirement and is expected to release updated regulations for them sometime this Spring. Most knowledgeable commentators expect the minimum salary requirement for the administrative and executive exemptions to be increased significantly.

The most likely exemption for customer service representatives would be the administrative exemption, which requires that the employee’s primary duty be the performance of “office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers” and include the “exercise of discretion and independent judgment with respect to matters of significance” to the employer’s business.  Such employees can engage in some sales activity on behalf of the employer, but that activity cannot be their primary duty. (Click here for a more detailed explanation of the requirements of the administrative exemption.)

For producers, the most likely exemption is one for outside sales persons for the reasons discussed in a 2009 opinion by the Wage and Hour Division of the Department of Labor that focused on life insurance producers, but the language of which would apply equally to property and casualty or health insurance producers.  That exemption requires the employee’s primary duty to be the making of sales or the obtaining of orders for services and they must “customarily and regularly” perform that duty outside of the employer’s place of business, which for this purpose means at the home or office of the customer or potential customer. (Click here for a more detailed explanation of the outside sales person exemption.)

If an agency’s producers don’t meet the second part of the outside sales person exemption, it is possible that they can meet what is known as the commissioned sales person exemption.  That exemption requires that the employee be paid at a rate in excess of the overtime pay rate (at this time $10.88) for every hour worked and that more than half of their total compensation be from commissions. (Click here for a more detailed explanation of the commissioned sales person exemption.)

An employee who was not paid overtime compensation when they should have been has the right to sue the employer in federal court to recover the extra compensation they should have been paid for up to three years before the lawsuit is filed.  In addition, if the employee convinces the court that the employer willfully violated the FLSA, they can receive liquidated damages up to double the amount of extra compensation they should have been paid.  Finally, a successful employee is entitled to an award for the attorney fees and other litigation expenses incurred by them, which award can sometimes be far higher than the amount of extra compensation the employee recovers.  Last year, an employee in Georgia who was awarded a little over $6,500 in extra compensation, also received an attorney fees award of over $173,000.00.  It is easy to see why lawsuits for unpaid overtime compensation are the most frequently filed employment related lawsuits in Georgia and elsewhere.