An agent misrepresents the percentage of operations over water on an application to obtain approval. What is the appropriate course of action?

• A. Move up the chain of command at the insurer to reach a decision-maker.
• B. Accept the misrepresentation and proceed.
• C. Wait for the regular underwriter on vacation to decide.
• D. Deceive the client to maintain the account.

Answer: (A)

Handling misrepresentation on an insurance application requires escalating the issue to someone with authority within the insurer to correct the record and determine the proper underwriting action. When information is misrepresented, it can affect the validity of the policy and the insurer’s risk assessment, so it’s essential to involve a supervisor or the appropriate decision-maker who can review the case, verify facts, and decide how to proceed. This protects both the client and the insurer and maintains ethical standards in the underwriting process.

Choosing to accept the misrepresentation or to wait for a vacationing underwriter does not address the problem and leaves the misstatement in place, which can lead to policy issues or claims disputes. Deceiving the client is unethical and illegal, violating trust and professional duties. Escalating to the chain of command is the correct course to resolve the situation properly.