How it all went wrong

You’ve done it before.  The insured calls about their auto policy with a coverage question.  After a long conversation, you thank them and then, you offer a different product.  It might be a Homeowners, Life or Umbrella policy.


It’s the classic cross-sell.  We all do it.  There are carriers and MGA’s that have contests and benefits if you sell the most.  Unfortunately, unchecked, this could end badly.  Just ask the folks at Wells Fargo.

Back in the day, a bank might offer new clients a toaster or a television to open up a new account at their bank.  Nowadays banks may offer $200 or $250 into a savings account or loan.  In fact, a recent article in the Penny Hoarder offered opening a bank account as a way to make extra cash.

These perks bring in tons of customers.  Once in the door, tellers and officers of the bank are expected to cross sell other items to them.  The problem Wells Fargo had, employees were opening up fake bank accounts – and no one was checking.

According to reports in Bloomberg Financial and the Consumerist, Wells Fargo had sent forth extremely strict sales goals.  In an effort to meet those guidelines, bank employees just started opening up fake accounts.   Even worse, The Wall Street Journal reports that Wells Fargo might have misled investors by promoting ambitious cross-selling techniques.  And, they have no plans to change them.

When those employees complained and/or reported the behavior – they were retaliated against.  In some cases, they were fired.   As an insurance professional, I find this abhorrent behavior.

Could it happen in insurance?  Yes.  We have a lot of ‘same risk, numerous policies’ situations.  In my own time, I have found more than one policy for an insured.  No matter what type of policy, this presents two problems.  One, the insured now has double liability.  If they have 100/300 on one policy and 250/500 on another; now they have 350/800.

The second problem, the insured is overpaying and has the right to recoup those monies.  If they have a claim before the mistake is caught, the insurance company pays out and may have to return the premium monies.

Although there are no cut and dry rules from the states on this since most the companies do not frown on the practice. For instance, how many policies do you have at one house?  Or say, how many instances where the wife has a separate car policy than the husband.   I once had a prospective insured that had nineteen cars and four insurance companies.  Any crafty lawyer could play that liability balance like a fiddle.

In the case of Wells Fargo, something unprecedented is happening – the Communication Workers of America (CWA) is stepping in at the urging of a grass roots group Committee for Better Banks – to clean up and help organize the banking industry.

Could this mean banking will now be unionized?  If so, how far off will insurance be at that point?  Do you even think it’s possible?  Something to think about going forward.

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