Opinion ID: 566008
Heading Depth: 3
Heading Rank: 4

Heading: Complaints from Underwriting Department

Text: 31 Connecticut General asserted that Billet's department was having problems with the underwriting department which predated his 1988 evaluation. These problems were so serious that underwriting, in Parry's words, had threatened to pull the plug on the Philadelphia office and not write any more policies for it, an act which would clearly have had a devastating impact. In support of this claim, Connecticut General cites to the following incidents, the facts of which are not generally disputed. 32
33 In January 1988 Billet's office renewed a contract with Murray Industries without approval of underwriting. Billet testified that this was a mistake on the part of a salesperson under his supervision, but another witness, Michael Ackerman, testified that he was present when Billet told the salesman to renew Murray at a rate lower than that approved by underwriting. 34
35 A policy was sold to Wilco Trading Company at a rate 14% below the authorized rate as a result of the failure of a member of Billet's sales staff, Paul Connolly, to follow rating directions given by underwriting. Instructions with respect to this were included in a June 9, 1988, memorandum but Billet did not distribute the memorandum. In an August 9, 1988, memo Parry chastised Billet for his refusal to accept responsibility for this incident and informed him that neither he nor Connolly would be compensated on this sale. A memo regarding this incident was placed in Billet's file. 36
37 Billet's office sold a group health insurance policy to Riddle Memorial Foundation which required the execution of a supplemental premium agreement. This supplemental agreement was drafted by underwriting, signed by Michael Wilkey, regional director for underwriting, and sent to the Philadelphia office. In processing this matter in the absence of the salesperson involved, Billet made certain changes to the agreement, had the agreement retyped, signed Wilkey's name to it and sent it to Riddle. Subsequently, the salesman, David Johnson, sent two letters without seeking approval from underwriting to Riddle regarding certain points in the agreement. Riddle executed the agreement, incorporating the letters as part of the agreement. 38 About a year later, Riddle canceled the policy and because of the incorporation of the letters from Johnson avoided a $300,000 cancellation fee. At first, Johnson was placed on probation because of this incident as it was thought that he had signed Wilkey's name to the edited agreement. He was, however, taken off probation when it was learned that it was Billet who signed Wilkey's name. 39 There were also other incidents which contributed to a strained relationship between the Philadelphia office and the underwriting department. Billet admitted that unauthorized quotes were issued from his office for Spectacor, and that policy and procedures were not followed in connection with transactions involving Silvatrim, Flagship and BPS. Clearly the situation was regarded within Connecticut General as serious for in June 1988 Billet met with Joseph O'Rourke, vice president of underwriting, Meg Woolley, regional director of underwriting, Parry, Botta and Sobocinski to discuss specific cases and concerns. 40 There was testimony that many of the sales made by the Philadelphia office in 1987, for example the Wilco and Riddle accounts, came back to haunt Connecticut General in 1988. According to Connecticut General, these problems had not surfaced when Billet's supervisor before Botta, James Bell, gave him an overall score of 2 for his first 1988 review. In addition, there was testimony that the Philadelphia office had a no-quote rate (i.e., instances where a quote was not received from underwriting) of approximately 32%, whereas the maximum acceptable no-quote level was somewhere around 15%. A no-quote rate is significant because it reflects business which should not have been submitted in the first place, so that it resulted in wasting resources in reviewing it.