How can you protect your agency against E&O claims? In working with agencies throughout the United States during the past 11 years, Grace Bauer has accumulated an extensive list of E&O issues and recommendations on everything from gathering prospect information to policy delivery. In this document, Bauer shares 15 points covering the major exposures.
- Account Review
This is a constant concern among all agencies. Complete an annual review of every Commercial and Personal Lines account. Remember that your agency is protecting itself, as well as the insured.
- Applications
Always double-check information when completing an application within the agency management system. This data will become the master information for all documents. Incorrect information can create an E&O nightmare.
- Audits
When working agency bill audits, make sure to enter a critical suspense date into the system for timely payment back to the company.
- Backlog
Check the backlog on each employee’s desk at least monthly. Unfortunately, we sometimes don’t learn that there’s a problem with an employee’s workload until the person falls ill or goes on vacation.
- Backup, Backup, Backup
Have at least three backups of your agency management system. Keep the first on premises, the second off site and updated daily, and the third in a bank safety deposit box updated weekly. In the event of a catastrophe, you’ll be glad you kept all three.
- Binders
Some agencies have had problems with companies not supporting the 60-day binder. Make sure to only issue 30-day binders unless approved by the insurer.
- Cancellations
Most E&O classes recommend that you make no contact with the insured after receiving a non-payment notice from the insurance company. Remember, most, if not all, financial institutions do not call the customer for a non-pay. However, we know that lots of agencies still calling clients for a non-pay, especially large Commercial accounts. If you’re contacting for a non-pay, remember to contact everyone — agency and direct bill accounts alike.
- Certificates of Insurance
Verify information on the computer system against the policy before completing a certificate. Incorrect information has created more than one E&O claim.
- Claims Service
We all carry insurance to protect us in the event of a claim. Consider giving the insured a little more TLC by sending them an initial letter and following up with a phone call one week later. Show the insured that you truly care.
- Computer System
Most agencies make only one employee responsible for hardware and software maintenance. Be sure your agency has two employees that can provide backup in the event of a hardware or software maintenance problem. Never depend on only one person!
- E-Mail
Never open an e-mail that looks suspicious.
- Endorsements
More and more agencies are endorsing policies. Ask your customers to provide a signature when they change deductibles, or reduce or delete coverage. If this seems too cumbersome, at least send the customer a copy of the endorsement request for their information.
- Expiration Report
Running a monthly expiration report for the current month, next month, and three months ahead, or running expirations through three months ahead will help protect your agency from missing renewals. Make sure to process all renewals for the current month, determine what needs to be done the next month, and work the normal 90-day advance renewals.
- Faxes
Always process faxes through the automation system. Because computer-generated faxes will automatically record a note within the system while manual faxes need to be recorded individually, making only one transaction will save time and steps.
- Files
Make sure that employees aren’t deleting files prematurely. Although Property/Casualty files need to be kept for at least three years, most agencies save their files for seven years because they might contain accounting information.
Every office procedure involves E&O issues. Implement these 15 steps and consider supplementing them with your own precautions to protect your agency from the dreaded E&O claim.