25 Apr Does Your Agency’s Procedural Manual Contain the Key Best Practices?
In many agencies I am honored to work with, there seems to be a heavy reliance on the agency system manual to serve the purpose of the agency’s procedural manual. While the system manuals are typically well-detailed, there is rarely any reference on many of the key E&O Best Practices indicating when they are to be done, what degree of detail is needed, and who is to perform the specific tasks. Key best practices that should be included are:
Exposure analysis form (new/renewal): This is one of the best silver bullets to prevent E&O claims. Typically, what is not covered generates an E&O claim when the client has an uncovered loss. The procedure should be to perform an upfront exposure analysis on new business and then mail or physically complete an exposure questionnaire for renewals. The procedure should involve who has the responsibility to handle it.
Proposal/quote/wrap includes all QMP disclaiming language: This applies to the agency’s accepted written proposal format/quotation forms, summaries, schedules, or disclaimer language wrapped around carrier proposals or quotes.
Non-admitted/surplus lines/low A.M. Best rating status of carriers quoted: This information should be part of the proposal or wrap disclaimer. Clients’ signatures should be obtained if the carrier has a low A.M. Best rating.
Client signatures on statements of value and business income worksheets: If SOVs or BI worksheets have a signature line, insureds must sign, and documents are to be retained in the file.
Client declinations confirmed in writing: Acceptable forms of written confirmation to the client include letters, emails, and revised proposals showing what was declined. The goal is to ensure a clear understanding of what was purchased and what was not. Memorializing back to the client’s purchase decision is highly suggested.
Policies and endorsement checking for accuracy: Files should indicate who checked the policy/endorsement and when it was checked. It should have either a completed policy checklist, notations on the agency’s copy of the document, or an activity/task noted in the system. All newly downloaded policies need to be checked against the quotation file.
Policies delivered within the agency’s established timeframes: The timing starts when the agency receives the policy/endorsement and ends when a fully checked policy/endorsement is delivered to the client. Policies should be delivered to the client promptly after they have been checked.
If there was a change in carriers, be sure the proposal/quote/documentation contains a comparison or some type of statement of material changes: Acceptable forms of written comments to the client include letters, emails, proposals and/or quotes that show what has changed.
Change requests are confirmed either to or from clients in writing: Emails from or to the client are acceptable. If the request from the client is verbal, the file should have a written confirmation via email, letter, or by providing a copy of the actual change request.
Client files include emails/conversations/texts for documentation: Emails are either attached to the agency management system/document management system or printed and filed. Ensure the proper agency management codes are being used per agency instructions. The staff’s use of their Outlook system to store client emails/correspondence should not be allowed.
Certificates of insurance are issued according to agency and state guidelines: The agency should establish set procedures for handling certificates, as improper handling generates around 6-8% of all E&O claims.
Written disclaimer included in response to contract/lease reviews: The agency-approved language indicating only the insurance sections of the contract/lease were reviewed, the agency and its employees are not attorneys and are not offering legal advice, and the client’s attorney should be consulted for legal advice are what is expected.
Umbrella requirements are being met: As umbrella and underlying policies are renewed, they should be checked to ensure that the umbrella’s underlying requirements are being adhered to.
Look to incorporate these best practices into your systems manual (if you can) or develop specific procedures to ensure these issues are addressed in sufficient detail.