30 Jan Your Agency Has Standards – Yes?
One of the founding principles of the E&O Plus program involves auditing, the concept of “trust but verify.” Without question, this need and focus on auditing has been an integral element of the success of many E&O Plus agencies. Ronald Reagan made the “Trust but verify” phrase famous in December 1987 after signing the INF Treaty with Mikhail Gorbachev. It is probably just a coincidence that the E&O Plus program started in 1986, one year before President Reagan made his statement. Who was really first?
From an E&O perspective, for auditing to be beneficial in reducing E&O claims, it is key that key policies (“best practices”) be identified where history has shown that lack of compliance in these policies will be problematic. Auditing is the key tool to measure the level of compliance.
Simply identifying the various “best practices” is clearly not enough, but it is a good start and hopefully educates staff on why they need to have a sharp focus on the issues; it establishes the expectation that guides the subsequent work to be done. However, it is only a good start if the issue is further developed, including what is required — the standards. Most agencies are good on this issue. The issues have been identified, and standards have been established.
I think some (maybe more than “some”) agencies fall short because they don’t define how to implement the standards. Procedures are instructions on how things are to get done. It appears that many think the agency systems manual is the procedures manual. I have not seen many where this is the case. For example, there will be a reference to identifying the client’s exposure, but it is only a reference. It does not state who is to do it, when it is to be done, how it will be done, and what it is to be done with the conclusions. Other system manuals I have read state “policy is to be checked,” but once again, by whom, when, what is to be checked, etc. Rarely is there much detail on the expected process when dealing with the E&S market, including comparing the E&S proposal to determine if all requested coverages are included and ensuring that specimen forms are secured and reviewed. I could go and on. The Operations Guide is a great resource (an updated manual will be rolled out around the 2024 E&O Plus Quality Management Seminar in September). Please see your agency’s quality coordinator for access to this guide.
Undoubtedly, system manuals are necessary and provide a great roadmap for navigating the system. This systems manual will play a key role, especially with new staff. But 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.
The way some agencies handle this is to develop SOPs (Standard Operating Procedures) that explain the necessary level of detail: the who, what, where, why, and when. At this point, after all appropriate training has been conducted, auditing will have greater value. It will truly be a good measure of the level of compliance with the key “best practices.” There should be a reference in the systems manual that speaks to the SOP that applies to that specific subject. Consider a link for easy access.
You will find that as the reviewers of the program (the “auditors” – although I hate that word), we will request the various manuals to determine whether they include the necessary details. If you would like our thoughts on developing the SOPs, never hesitate to ask for our comments. We are here to help; we want to be viewed as “part of the team.” Our goal is to do what we can to assist you in minimizing the potential for an E&O claim to be brought against your agency.
Bottom line – an agency system manual without details on the key procedures or reference to the key procedures (the who, what, where, why, and when) is missing the mark and will lead to, at a minimum, a lack of compliance as well as an increase in the potential for an E&O matter to develop. This is why auditing has such a high level of importance.