I’m told that well over 50% of Commercial Applications are returned for missing items, which are necessary to quote. Some general agencies & companies have considered reducing commissions up to 2% as a deterrent to this widespread practice.

Why are apps submitted without all of the necessary information? We have to believe it is due to a lack of understanding / training on behalf of the employees. Who would deliberately submit an incomplete app? Incomplete apps increase phone calls and faxes. Incomplete apps prevent proper rating and often result in cancellation notices, which generate up to $75.00 in reinstatement fees.

Here are a few problem areas on many commercial applications:

(1) Nature of Business / Description of Operations by Premises … PAINTER (not what kind … is it inside or outside painting, or both? Is there spray painting? Underwriters need a complete description.

(2) Years in business and Prior Carrier Information, plus Loss History (or none) … BLANK!

(3) Coverages … nothing shown, would you believe?

(4) Schedule of Hazards … cannot rate the Coverages without this area. It seems a large percentage of CSRs do not realize that Risks are rated on Payroll, Sales (Receipts), Area, Cost, Admissions, Per Unit.

(5) Valuation … instead of showing Actual cash Value (ACV) or Replacement Cost (RC) … the answer is quite often "Yes", or "No".

(6) Causes of Loss … Basic, Broad or Special … would you believe "None" or "Unknown"?

(7) Completely left of 60% of the time … Burglar Alarm type, or should show "none; Premises Fire Protections … BLANK … are there fire extinguishers? Smoke alarms?

N-Surance Outlets, Inc. has provided a few instructional examples of the most common areas of concern. I realize there are hundreds of applications other than Acord but they can be used as agency training tool.

(1) Commercial Insurance Application (Acord 125)

(2) Commercial General Liability Section (Acord 126)

(3) Property Section (Acord 140)

(4) Umbrella Section (Acord 131)

Click here for PDF Examples: Acord Instructions color.pdf

Complete applications have an added benefit … it helps avoid the dreaded "We Don't Need You" letter. It may sound callous and it's true, the market won't be hard forever, but sometimes, companies have to cut their losses - I think it would be helpful for agents to understand this.

Here’s an example that recently went out from one of Georgia’s Commercial Lines General Agencies:

I have three submissions from your agency on my desk. All of which are General Contractors coming out of seriously under priced standard facilities. Your indicated target premium on one is under priced by more than 500%, based on our current facilities.

As most brokers, we have limited resources - we concentrate on those agencies with which we have a history of success. Your agency has submitted risks to us over the past three years, yet not a single piece of business has been placed with us. Many of the risks have been declined for one reason or another, other offers given, resulting in no order. Experience tells me that continuing to support your agency will only cost us both time & effort.

For these reasons, I am closing any open quotes and your agency file.

You wouldn't believe some of the stuff that Commercial Lines General Agencies receive from folks who actually want them to use to quote!

Insurance Expo 2003 will feature a "Commercial Lines Tips ‘n Tools’ Have Van … Will Travel" 3 hour CE seminar. My guest speakers bring in a few of their incomplete submissions for examples of how not to submit a risk. Will yours be one of them?