16 Feb How Would You Feel if Your File Was Involved in an E&O Claim?
Do you know which of your files is going to be involved in an E&O matter? Of course not. For this reason, it is incumbent on staff to handle and manage all of their files based on the agency’s expectations.
First, it is important to point out that just because one of your files became the heart of an E&O claim, it does not mean you did anything wrong. An agency can follow best practices and still have a claim brought against it. As the saying goes, “You don’t have to do anything wrong to get sued.” Typically, in any given year, more than half of E&O claims are closed for no payment. With the right level of E&O loss prevention, you have a greater chance of winning these cases.
Consider trying this exercise:
At an upcoming staff meeting, access the agency system and bring up a list of accounts for each of the staff members. Then for each of the account executives in the agency, pick a file at random that was worked on recently. Consider creating a hypothetical scenario that this client recently suffered a claim that was not covered. For example, if you are in an area where floods have occurred, you could use flood coverage. Another approach is to have the entire group do an evaluation of the file. Keep in mind that this exercise should be done in the right spirit and used as a learning experience.
Review the file and determine which elements will aid in the defense of the agency and which elements will hurt the agency’s defense. Look at issues such as the level of documentation, how communication with the client was handled (anything that would have identified new or emerging issues or other coverages for them to consider), and how rejections of coverages were handled. You can certainly include additional items.
With the agency now facing this hypothetical claim, what do you think the chances are for the agency to prevail in the claim? Add to the discussion – what could the agency have done better to enhance the chances of winning the case?
Hopefully, with the files that are well-handled, this exercise will show how following best practices enhances the chance of the agency prevailing on an E&O matter. Could this exercise help identify weaknesses that need greater attention? Quite possibly.
The other option is to wait for an actual E&O claim to occur and then be left with the lawyers sorting things out. I think you will agree with me that option No. 1 is probably best.