19 Nov Are You Good or Lucky?
In my 37 years entrenched in the world of E&O, I have encountered many agencies that have never encountered an E&O matter. Good for them. This seems to resonate in their minds that addressing key E&O loss prevention issues is not as important. One of their common phrases is, “I have never had an E&O claim; why should I change what I am doing?” My typical response is, “Are you good or lucky?” Allow me to explain.
Being good is a skill. It is typically achieved through a commitment to training and hard work. Many will contend that if you are good, you are more able to determine your success, certainly better than being lucky. If you are good, the odds are better that you will succeed through skill and knowledge. Luck may very well follow you. For example, go to a casino – would you rather be a good blackjack player or a lucky one?
Being lucky sounds like a gamble, an outcome you don’t have much say over. There is an age-old expression – “luck is when preparation meets opportunity,” so there is the possibility you can increase your chances of being lucky when you put some time into preparation.
In the world of E&O, here is an example of “good versus lucky” and which ones will provide a better outcome. Imagine that a client asks the agency staff to put collision on a vehicle. The agency staff member is busy and somehow forgets to handle this task. Is this an error? Technically, yes, but if the client does not get involved in an accident where the collision coverage would have come into play, there is no E&O claim because there is no loss. As a reminder, typically, what often generates an E&O claim is when a claim occurs and there is no coverage in effect. So, no loss translates into no E&O claim. In this case, the agency was lucky. They did not provide the client’s requested coverage, but no loss occurred. Had a loss occurred, the outcome would most definitely have been different.
I would venture to guess that this scenario has occurred in many agencies and that there are actually “mistakes” in the files, but since the client did not sustain a loss due to the agency’s negligence, no E&O claims were ever made.
Contrast this element of “being lucky” with “being good.” What does “good” look like? It looks like a procedure that details the expectations for handling a client’s request. A procedure that includes the memorialization back to the client of the details of the request. A procedure that all staff are aware of and have been trained in. There is certainly the possibility that just because there is a procedure in place that staff have been trained in, putting collision on the vehicle is still not completed. One could venture to guess that the odds of a “mistake” generating an E&O claim is much less.
The bottom line is that while it is definitely better to be “good” than “lucky,” maybe being “good and lucky” will result in a better outcome.