The Shredder

I think I've been out of the business long enough now to tell this story.

One morning I got a call from a church in my territory that was going to lose its Work Comp coverage with a competitor because of one large claim.  Looking at their loss history they'd been a very clean risk, but the other company was trying to shed clients because of reserve problems so they decided to cancel this Work Comp policy.

My company would not write a stand alone WC policy but insisted on getting the entire church's package.  "No problem", was the response from the church and I made an appointment to go see them the next day.

In my office I had a file cabinet full of old quotes done by agents who had worked the territory before me.  Before I went to a church that was new to me I always checked that file to see if an old quote was in there that might have building drawings or other useful information.  If the drawings were there it could save me a lot of time while at the church.  This particularly church had a number of buildings, so finding the drawings was a pleasant surprise.  Probably knocked 90 minutes of grunt work off my appointment.

As I looked through the file I found that this account had been submitted for coverage to my company about 10 years earlier but had been rejected.  There was no reason marked for the rejection - just the underwriter's name and date.  It was a different underwriter than was servicing the area now, and back at that time rejections or underwriter notes weren't entered online - they were only kept in old archive files at which nobody ever looked.  The current underwriter would have no information about this church readily available to him.

I thumbed through all the underwriting information that had been submitted and everything looked fine...until I found a copy of a 12-year old lawsuit that had been filed in Oakland in which a woman accused a church's pastor of sexual misconduct during a counseling session.  The name of the Oakland pastor was the same as the pastor of the church I was about to go see.

Nowhere in the file was there any documentation regarding the disposition of the case.  I couldn't tell if it had been tossed out, settled in one party's favor, or had been won by the plaintiff.  It's rare for these things to go to trial so I assumed some sort of settlement had occurred.

Now I had a choice.  If I mentioned the old lawsuit and company rejection to my underwriter one of the following would surely occur:

  • He'd reject the client outright.
  • He'd require me to go confront the pastor with this old lawsuit and try and get some type of proof of the disposition before he'd decided about the church's insurance.
  • He'd agree to write a church policy but would exclude the pastor from the coverage.
None of those three were acceptable to me.  It was a fairly large account, the client had a time crunch in which to get this done, and if no one in the current leadership at this church was aware of this old case it could be quite upsetting to the pastor and the church.  

I looked again at the loss run from the church which covered more than 10 years.  There wasn't a single incident or report of any problems involving the pastor or anyone else in the church regarding similar misconduct.  Given the time that had passed I made the unilateral decision to ignore the old lawsuit.  I took it out of the old file in my office, took it home with me and ground it up in my shredder.

A complete package of policies was written for the church and I had them as clients for several years until I left the business.  During that time they paid tens of thousands of dollars in premiums, had zero claims of any kind, and made me, the agency and the company a ton of money.  It was a good call, but one that would have gotten me in trouble had it been known at the time.

Sometime you just have to go with your gut instincts.

(By the way, you'll notice that I didn't give any information in this post that would allow someone to figure out which church I'm talking about.  I did that both to protect the church from harassment by the insurer, and because I know if anyone from my old agency's management team reads this it will drive them nuts.)