AGENCY AUTOMATION: E&O FRIEND OR FOE? — Part 3 TRANSACTIONAL FILING

by Curt Pearsall

Many agencies largely misunderstand transactional filing, even though it can have a significant impact on their E&O exposure. This article by Curtis Pearsall will focus on the potential impact of agency automation on E&O claims.

 

Going back to the late 70s and early 80s, I can remember a slogan “Paper free in 83.” Many would argue that we're worse today than before. Yet for many agencies, the move to transactional filing has been a giant step forward. Essentially this technology involves the elimination of paper files. Paper that would normally be included in an insured's file now goes to an electronic folder marked with the date of the transaction. To review a file, you go into your computer system and examine the various transactions, with each showing the date that it was requested, handled, etc.

The benefits of transactional filing include:

• With the proper training to ensure that the staff understands the system/concept, morale is almost always enhanced. Think about it. Would your attitude be different if you came into work and there were no files or papers on your desk? Sounds pretty good to me!
• Since you don't need to see the file to determine what has been transacted, you can improve your customer service by simply going into the system for the history of the transactions you're looking for. This also applies to claims. Thus, to a large extent, anyone can view anyone else's work.
• Virtually all of the agencies that I spoke with reported an increase in efficiency.
• Many of the new transactional filing systems have been enhanced with
• built-in suspense features. Remember, there's no file to put suspense items in.
• The system can store various checklists that have been used to evaluate the exposure, any correspondence from insurance companies and insureds, as well as letters from the agency. Because these records are stored by date, no one can change the date — a valuable feature in the event of an E&O claim.

On the downside, many employees I spoke with said that they're reluctant to give the system a fair chance because they didn't understand it. Be sure to communicate to your staff the objectives of transactional filing, and provide them with the necessary training, as well as answers to their questions.

Also, if you or your staff takes any information on the phone, there's no backup of that information. There is still the potential for “misunderstandings” in phone conversations. To alleviate this potential for misunderstandings, I'd recommend that your agency send a confirmation letter out on any additions/deletions/rejections of coverage.

Some other issues that you'll need to consider with transactional filing include:

• How long should you retain copies of correspondence? Many agencies go with a seven -year period. Consider the statute of limitations when evaluating this issue.
• The need for a disaster plain in the event that you lose your electronic records either temporarily or permanently. Virtually every municipality has companies that offer off-site storage. Thus, if you lose power, you can be up and running with the same data fairly quickly. You should also do daily backups to ensure the quality and accuracy of your records.

Curtis M. Pearsall , CPCU, AIAF can be reached at Utica National Insurance Group, P.O. Box 530, Utica, NY 13503, (800) 274-1914, fax (315) 734-2807, or e-mail [email protected]. This article originally appeared in the Utica National Insurance Co. E&O Bulletin and is reproduced with permission.