05 Jan Are You Holding Your Clients Accountable?
“Why is it always our fault when a client has a loss that is not covered? They knew they didn’t have that coverage.” For many agency staff members, this is one of the bigger frustrations.
First, it is not always an agency’s fault when the client has a loss that is not covered. There are many defenses that can potentially be applied when your client looks to hold you responsible for their uninsured loss. For this reason, over 50 percent of all E&O claims are closed for no loss payment. One of the key issues that will increase your chances of prevailing in an E&O matter is accountability – specifically client accountability.
Stephen Covey said it well, “Accountability breeds response-ability.” When you hold the client accountable, you are making them take responsibility for their actions.
When an E&O claim happens, the E&O carrier will look to secure the actual file in question (paper or electronic) to see what it looks like and what’s included. Solid documentation (that is prompt, accurate and professional) will make the E&O carrier’s job much easier. By the way, the client’s attorney has a right to view these documents as well.
When clients are asking questions, modifying coverages, etc., these questions (and the answers provided) should be documented in the agency management system. They should also be documented back to the customer. The objective is to have documentation that confirms and memorializes the discussion. For example:
“Per our conversation of (date), you are declining the flood proposal we recently provided. If I misunderstood you or this is contrary to your understanding, please contact the agency immediately.”
The goal here is to attempt to address any potential misunderstandings between what the client told you (or thought they told you) and what you heard. If you were to simply document the conversation in the agency management system, this does not help to identify a potential misunderstanding.
Imagine what would happen in that hypothetical E&O claim if your agency had very minimal documentation in the system and there was no memorialization of the conversation. It would be your word against the client – and I hate to tell you, but you will probably lose more of those arguments than you will win. When you really think about it, memorializing a discussion does not take much time to produce – yet it can have such a profound impact on an E&O claim if one develops.
The absolute best type of documentation involves something with the insured’s signature on it. Without question, accountability is enhanced when an agency can get the client’s signature on a document. This is why getting clients to sign applications is so important. A solid best practice is to require that the client review the application and if everything looks in order, to sign it.
When you enhance your level of client accountability, you are making your client responsible for their buying decisions. At the end of the day, isn’t that the way it should be?