'I’m going to quit smoking.' 'I’m going to drop 15 pounds so I can wear a tux again.' Like us, you probably don’t need help coming up with a New Year’s resolution or two. However, this document by Curt Pearsall offers some resolutions for your agency that are definitely worthwhile.
As we begin the new year, tradition has it that we look at ourselves to identify changes that will make life more fulfilling and enjoyable. Although most people focus on their personal lives, a New Year’s resolution that deals with their professions can be just as significant.
I’d recommend that all agency owners ask themselves and their employees these questions:
- Do you feel trained on every product the agency offers?
- When you speak with a client about coverage do you take the time to make sure they understand what you’re saying?
- Do you conduct a risk survey on each client at least once a year?
- Do you document all conversations that relate to any current, past, or prospective client?
If the answer to any of these questions is 'no,' now’s the time to make a New Year’s resolution to practice E&O risk management.
Let’s look at the last question. During the past 15 years, I’ve heard many attorneys say that if the agent had only documented the conversation, either they wouldn’t have faced an E&O claim or the result would’ve been totally different. Here’s one such case:
After a fatal truck accident involving a product made and installed by an agency’s Commercial Lines client, the insurer denied coverage because the client didn’t carry Products and Completed Operations Liability insurance. The client settled the fatality claim, and then sued the agent for failure to provide the coverage.
The agent had written the client’s Liability insurance, including Products and Completed Operations, for several years. After the carrier gave notice of non-renewal, the agent obtained a Liability policy that excluded Products and Completed Operations. It then sought to replace this coverage as a stand-alone product — but was unable to do so at the lower rate the client had requested. However, because the agency failed to document its inability to find Products and Completed Products coverage, the client argued that they were never told their replacement Liability policy omitted any of their previous coverage.
Without documentation of the replacement coverage discussions, the jury weighed the conflicting verbal testimony of the parties and ordered the agency to pay the client for the underlying coverage. If the agency had taken the time to give the client a written update on its failure to obtain Products and Completes Operations coverage, it might well have won the verdict.
Similar cases crop up time and again. Documenting coverage renewal discussions is a wise investment that can go far to reduce the chances of your facing claims (and increases the odds of your finding competitive E&O rates in a tightening market).
Make 'document everything' your E&O New Year’s resolution — and you’ll benefit from a more efficient and profitable agency with an unsullied reputation.