05 Oct E&O Requires a Consistent Focus
Looking back 45 years ago, when I started in the insurance business at the agency side (S-Z for Commercial, Personal, and Claims), I wound up handling the E&O for the agency since the name of the agency fell in my portion of the alphabet. Back then, the E&O carrier involved provided a policy, and that was all — no loss control articles, no E&O classes, etc. Other than handling the renewal process, I am not sure I knew what E&O really involved. Bottom line, there was minimal focus on the various best practices that were key to preventing E&O claims. Today, things are certainly much different. Working towards bringing a strong focus to E&O loss prevention is certainly a significant element of the role of Angie, Mishell (our new reviewer), and myself when interacting with the E&O Plus firms.
As you are aware, as the reviewers, we are on-site for typically 1-2 days. Agencies with a strong E&O culture have a solid handle on the other 258 workdays when we are not in your offices. For those agencies that are still developing and maintaining a strong E&O culture, an important element towards that goal is to ensure a continuous focus on E&O overall and the various loss prevention components. It’s like “E&O is in the air and the water.” It doesn’t overwhelm you, but you are continuously reminded of the importance of E&O. This focus is one of the issues that, as reviewers, we look to evaluate when we meet with the agency staff.
Here are some elements to include to ensure a strong focus:
Role of Senior Management. The importance of their role cannot be overstated — it is critical. They need to clearly demonstrate that E&O loss prevention is a vital issue for the agency. When an E&O claim happens, and defense dollars are paid to defend the agency against the allegations, these expenses directly hit the agency’s bottom line. When a claim is paid, the agency deductible (significant in most cases) has a major impact.
Reference to E&O. I have seen with many agencies that when the senior management meets with the staff (on-site or virtual), they ALWAYS include the importance of E&O loss prevention. Many of these agencies reference the divisions that are “passing” their audit scores leaving everyone to reflect on which divisions are probably not achieving a “passing” grade.
Reports to the Board of Directors. Due to the importance of E&O, a quarterly audit results report should be provided to the Board of Directors. This practice clearly shows management takes this issue very seriously.
Celebrate positive review/audit results. E&O loss prevention is not a sprint; it is a marathon. It takes hard work with a dedicated effort and is not accomplished overnight. As progress is made on various E&O issues, celebrate those accomplishments. This should spur the team on to further progress.
Have an E&O champion in every division / every branch office. Procedures must be consistent among the various agency offices. The same holds true for E&O awareness and culture. Achieving this will be more attainable with someone dedicated in each office and each division. This will help to reinforce key E&O best practices.
Communicate to staff on an ongoing basis. This is where material such as the E&O Plus blog and the other E&O Plus resources help to do the job. Sending this material to the staff serves as casual reminders that E&O loss prevention is important and adherence to the best practices is expected.