Managing An Agency Is More Challenging Than People Think!

One of the nice things about writing articles about E&O loss prevention is that you don’t have to look too hard to find a topic. For example, recent changes in our industry are putting more pressure on today’s agent to perform at a professional level. Two of these changes involve the National Flood Insurance Program and an Ohio Supreme Court decision.

I saw a nice recap of the changes in the flood program in ProAgent, the magazine of PIA PA/MD/DE. This article won’t address the specific changes, which went into effect October 1, 2000, but some of the changes are worth noting to help make my point.

Most of the changes seem to improve the program. Information can be accessed more easily, and the policy is easier to understand and more responsive. Having been an agent and had to handle the flood program, I see this as a definite step in the right direction. However, there are some areas that agents need to understand completely, because you need to advise your clients quickly and accurately. What are some of the changes?

• The agent is now the one to interpret some elevation data and determine the lowest floor.

• The definition of the 'single building rule' was changed. The agent needs to explain the impact of the change and help the client to decide what’s best for them.

• The description of building property was changed. The values probably will need to be reviewed to ensure that items are properly insured.

When your agency learned of the changes in the National Flood program, how did it inform the staff? Did you get together with them, educate them on the changes, and lay out a game plan for dealing with your customers? To be able to respond to the changes, your producers and CSRs need to know what they are and how they’ll affect their clients. Your clients are counting on you.

Another issue involves the Ohio Supreme Court decision in the case of Linko v. Indemnity Insurance of North America. Essentially, the court decided that the UM/UIM election/rejection form must include an established set of criteria. In other words, the existing form is no longer valid. Although this is an Ohio issue, the same thing could happen in other states: A court decision could require agents to react quickly to give their clients accurate, detailed information and advice.

I suggest that agencies be prepared for such situations by making a staff person responsible for monitoring industry changes, including court decisions, and coordinating and directing the staff on the appropriate action.

Managing an agency has never been as easy as it might seem, and some challenging issue is probably right around the corner. Preparation and a game plan for handling these issues will save you some anxiety down the road. It could save you from an E&O claim or two, too.