05 Sep Taking Auditing to the Next Level
Without question, the E&O Plus firms active in auditing are seeing tremendous benefits. A solid auditing program provides insight and detail on the extent to which the agency staff are meeting the agency’s expectations on the established procedures. The E&O Plus audit questions are heavily focused and connected to the program’s Key Components. A fair number of agencies are saying, “we want more.” They want additional insight into other key agency issues and procedures to see the level of compliance. Some additional issues include:
- Proper handling of late direct billed premium notices. This is often an area where agencies need more consistency among staff. The key issue that all agencies need to understand is that performing the follow-up determines the standard that the agency will be held to. More detail on this issue is in the E&O Plus Operations Guide in Passport.
- Client promptly provided with bind confirmation. This is extremely valuable in ensuring no misunderstandings between the agency and the client on what was bound and what was not.
- Emails are stored promptly and in the right system location. The proper use of the system and the various naming conventions greatly increase the agency’s efficiency. When someone (whether that is the person who put the information in or another agency colleague) properly and promptly uses the functionality and capabilities of the agency system, it results in locating the key information much quicker. Properly handling the naming conventions is an often-overlooked area where inconsistency is rampant.
- Documentation in system handled within agency guidelines. First, agencies must have a document that details the expectations on documentation. This should address when the documentation should be completed and what details should be included.
- Invoicing of client promptly handled. Agencies are funny about this. When they write business, they want to get paid for it. This includes the coverage premiums as well as any fees.
- Fee agreement (if applicable) dually executed, signed and dated. This ensures that the client is aware of a fee agreement and has consented to the agreement and what the responsibilities and expectations are of each party.
- System reflects client-specific data. Data is king, and today, more than ever, agencies are looking to better understand and evaluate their business, especially what industries those clients represent. Many firms have established dedicated specialty divisions due to the growth of certain industries. Agencies should determine what data they want the system to reflect and ensure a process is in place to secure it.
- Request for renewal information sent to the client within the agency timeframe. This includes updated exposure information as well as any change in exposures. Starting the process on time may be key in determining the outcome.
- For clients with claims-made coverages, verify there is evidence clients have been advised of reporting requirements. Claims-made coverage (typically the various management liability coverages) significantly contributes to E&O claims activity, as clients may not understand the issues that could trigger coverage. Including this information in the agency proposal is widespread among E&O Plus agencies.
- Confirmation of the required CAA Broker Compensation Disclosure Statement (Benefits). As part of the Consolidated Appropriations Act, firms must disclose all compensation to clients if they expect to receive $1,000 or more in direct or indirect compensation for services to be performed. Agencies want to ensure that the proper disclosure has been made.
Agencies are encouraged to expand their audit questions to gain greater insight into their firm’s performance.