17 May Are You / Is Your Agency a Better E&O Risk Today Compared to a Year Ago?
Now that we are in the second quarter of 2022, now is a good time to give these questions serious thought. However, when answering this question, regardless of your position within the agency, it is crucial to be honest because many factors determine this. Some key issues include:
Management/Leadership
Management must clearly and frequently demonstrate its E&O commitment by “walking the walk” and “talking the talk.” Without this commitment, it will be difficult for the staff to embrace a strong E&O culture and achieve the agency’s desired commitment level.
Staff Commitment and Education
Every staff member must perform their duties ethically and professionally. Technical proficiency is vital because your customers count on the staff’s expertise on various insurance matters. Since an agency can be liable for what it says and what it puts in print, how the agency staff responds to customers’ questions is important. It is also important for the staff to receive proper training in sales, customer service, and systems.
Exposure Analysis Checklists are a Must
These checklists have often been referred to as the “silver bullet” for preventing E&O claims. “What is not covered” is typically what generates an E&O claim.
Educating Your Customers
There are many approaches to accomplish this, including newsletters and social media. A typical approach is to send a renewal checklist each year to clients, asking them how their exposures have changed while bringing their attention to various key coverages such as umbrella, flood, earthquake, fine arts, etc.
Documentation
Accurate, complete, timely, and professional documentation is one of the most important, if not the most important, aspects of quality E&O loss prevention. Here are two good rules of thumb regarding documentation:
- Another staff member should be able to review the documentation and know exactly the account’s issues and open items.
- If a jury had to read your documentation, you wouldn’t cringe at its revelation.
Other Key Aspects to Consider
- Are agency procedures documented and being followed consistently by staff?
- Does your agency have an audit program to verify your beliefs?
- Does the agency provide limit options for customers forcing them to decide what limits they want and those they don’t?
- Is your agency using a standard template for the proposals you provide? Does it include explanations and definitions of keywords and phrases?
- Are your producers securing sign-offs from customers for unwanted coverages?
So how did your agency measure up? One of the agency goals should be to improve your E&O prevention. If you have some work to do, now is a good time to start.