E&O Security In The 24/7 Agency

If you’re doing business around the clock, make sure to have effective E&O procedures in place.

There was a five-car accident in your town last night:

• One of the drivers just wants to get some sleep and deal with it in the morning.
• One wants someone working on it now.
• One can’t wait to seek the reassurance of that lady in his insurance agency who is always so nice and will take care of everything.
• One wants to jot down exactly what happened while it’s still fresh in his mind. He’s too hyper to sleep.
• One wants to take the car to her favorite shop, pick it up fixed, and not be bothered with any paperwork or hassle.

Since clients come in all varieties with different preferences, the insurance agency that wants to attract and keep them must offer different things. If you’re creating various communications channels, ponder the legal ramifications of each one.

Here are more examples of special needs:

• A client wants an Auto insurance quote on a new car at 8:30 p.m. so he can call the dealer with his choice in the morning.
• A contractor is putting a bid together for a new client after a hard day’s work at the site of a current job. He has just discovered that it needs a Certificate of Insurance attached — and he wants to drop it off on the way to work at 7 a.m.
• A Commercial insurance prospect is a power E-mail user and wants your E-mail address in case she has any questions on your proposal that she’s reviewing over the weekend.

These expectations for service exceed the normal eight-hour workday. You can choose from various operating strategies to meet them:

• Responding to out-of-the-office requests wherever the insured catches you: at the golf course, supermarket, or your home.
• Extending office hours on some or all workdays from 7 a.m. to mid-evening, via staggered eight-hour employee days.
• Using carrier claims-report 800 phone lines for all claims reporting or just for “off-hours” claims reporting.
• Signing up for a carrier service center for policy service (for instance, coverage changes, billing questions, binders for closings, certificates for third parties).
• Voice mail at the general office level or at the individual’s own phone extension.
• Phone answering services with or without beepers and on-call rotation of responding agency personnel.
• E-mail to a general agency address or to the individual addresses of staff members.
• Opening the agency’s Web site to clients and including an E-mail hyperlink to the agency or to a department within the agency.
• Interactive, transactional Web sites that allow the online visitor to do something, such as report a claim, request an ID card, report a car change, rate a new car option — not just with a free-form request, but by completing required data fields (probably via dialogue boxes) that will be viewable by agency staff and electronically transportable to the carrier and into the agency-management database.

An interactive, productive Web site goes one step further and allows Commercial clients to complete the transaction with a print-product, such as an ID card, that they can print on their own printer or with a confirmation that notification (for a claim or for a policy change, for instance) has been transmitted to the carrier.

Each of these 24-hour, seven-days-a-week ways of doing business has its own benefits, costs, and E&O hazards. An analysis of the concerns associated with each and recommendations for its safest implementation might be helpful.

SUPERMARKET/ GOLF COURSE/HOME PHONE

Concerns : Your courtesy will be mistaken for acceptance of the risk being described (for instance, coverage on the new car or the higher limit being requested). You’ll forget what you’re being asked to do by the time you get back to the office. You won’t document the conversation, so it might be “creatively” remembered by the client later on to their own advantage. It won’t be appropriate to ask the client for all the information that you need to bind coverage or resolve the issue.

Recommendations

• Avoid these conversations by nipping them in the bud. Try humor. “My putter with the computer-relay chip back to the office hasn’t come in yet. Might I call you as soon as I get back there Monday?” Then write a quick reminder to do so.
• Keep a scratch pad and pen or a palm pilot with you to note unstoppable information.
• Don’t put your home and cell phone numbers on cards, letterhead, brochures, or ads. Giving business associates these numbers will only increase your liability for information left there.
• If some of your clients have become accustomed to calling your home, consider adding a line that your non-insurance family members can use to get you and your voice mail.

LONGER AGENCY BUSINESS HOURS

Concerns: The staff people covering “off” hours will not be as experienced as necessary in client-contact skills and insurance detail. Looser supervision outside of core hours will allow a less disciplined response, less seriousness of purpose, and a poorer standard of documentation. Off-hours work might be treated as less intensive than core hour work, so payroll costs might be less productive. Tiredness from working overtime might inhibit clear thought and good communication on the part of the agency’s staff. The automated system might not be available at certain hours (due to system backup or end-of-day processing), so necessary information might be unavailable, and mistaken information might be relayed to or used with a client or other caller.

Recommendations

• Establish new hours as a new way of doing business, not as an extra burden on the staff.
• Make scheduling a management function to ensure that stable, consistent, and qualified help remains available at all times.
• Be sure that all shifts are supervised or staffed with an experienced person, able and willing to give counsel and help callers.
• Bring the system manager into the planning process for the new schedule. Doing backups and day-end by remote processing overnight might be an option so that the system is always accessible when the agency is open.
• Create an on-call system to a manager or system tech to handle system trouble (such as crashes).

DIRECT REPORTING OF CLAIMS BY CLIENTS TO CARRIERS

Concerns: The carrier might explain an uncovered claim by saying, “Your agency should have offered you that coverage” — thus upsetting the client, even though there’s documentation that the coverage was offered in the agency’s electronic file. A coverage-enhancing opportunity might be missed because you won’t be talking to the client at their most susceptible time. (Having a claim teaches the value of proper coverage better than anything else can.) Your agency might remarket an account to a new carrier without knowing its full claims history, thus depriving the quoting carrier of the true underwriting picture. The agency might not put together a procedure to track claims reported to the carrier, so a claim might go far awry before the agency has a chance to intercede or help the client. The result: You lose an educational opportunity for staff to learn nuances of coverage and the importance of offering higher limits and optional endorsements.

Recommendations

• Ascertain how each direct-reporting carrier will keep the agency informed of reported claims.
• Some carriers (too few!) download all claims to agency-management systems nightly. Others fax or E-mail individually throughout the day. Still others report via claims registers (lists) daily, weekly, or monthly. Choose a method to stay in the loop and monitor it to make certain that it works.
• Determine your preferred tracking mechanism for directly-reported claims. Ideally, this procedure should include entering claims into your database. Other less ideal procedures include working off the carrier’s system (via a dial-up or Web-based access) or relying on the carrier to provide loss runs when the agency remarkets or has to replace an account.
• Set up and monitor a non-optional follow-up procedure to ensure that claims are kept on track and the client is satisfied. Remember, if only the carrier does a satisfaction questionnaire, clients might think that the carrier cares more about their happiness than you do.
• Give special attention to claims that are denied or not paid in full, so clients understand the rationale and their options for future coverage.

COMPANY SERVICE CENTERS

Concerns : When the underwriting risk changes (for instance, when a young, newly licensed driver or a sports car is added), the carrier might non-renew, raise the rate, or cancel before your agency has an opportunity to find a less upsetting course of action. To save on premium, the client might reduce limits without proper education. Changes (perhaps a new address or underlying limits reductions) are made that might have repercussions on other parts of the account that might be with this or another carrier. The agent is kept in the loop by download only, and crucial coverage changes are overlooked by the agency. Clients who feel dissatisfied or that they’ve been treated unacceptably might become disaffected, less loyal to the agency, and less forgiving.

Recommendations

• Think through the income and expense repercussions of using a service center. Plan and cost out the procedures necessary to remain aware and ready to act on any relevant coverage changes the insured makes.
• Become friendly with service center’s management and (if possible) the staff that will handle your clients, so that they know you want a “heads up” on any less-than-happy client.
• Check your client list for individuals better handled by your agency staff and exempt these clients from the service center.
• If download is the “notifier” to the agency of policy changes, create a review procedure to highlight the changes so appropriate action can be taken.
• If your agency-management system allows it, create an automatic open activity or diary on downloaded revisions that don’t emanate from an agency order. This will call them to the attention of the CSR or account manager, so that other relevant changes or recommendations on the other policies in the account can be made.

VOICE MAIL AND ANSWERING SERVICES

Concerns: Messages pile up during a staff person’s absence or “busy time.” Because incomplete information is not followed up, the resulting transaction is incorrect or incomplete. The insured believes that coverage is bound when it has been only relayed to the agency. Messages don’t get relayed at all due to “operator error.” Phone tag delays necessary action.

Recommendations

• Use a simple voice-mail system. Make sure that it’s checkable from outside the agency.
• If you use an answering service, do thorough reference checking and frequent tests by calling it at weird hours with difficult messages to see if the message quality and timeliness is acceptable.
• Consider using voice-mail systems that automatically switch messages to another line (such as the manager’s) if the piled-up messages exceed a set number or set time without being answered.
• Set specific standards for responding to and clearing voice-mail messages (for instance, by the end of the day or every four hours).
• Set specific forwarding standards. For example, set messages to be forwarded if you’re going to be out of the office for three or more hours; have the supervisor forward all calls of anyone who calls in sick to a colleague.
• Do routine, scheduled tests to audit compliance with call-back standards.
• Don’t rely too heavily on “We can’t bind coverages via voice mail” recorded statements. Such language hasn’t been tested in courts and lack of a timely response from the agency would probably override its effectiveness anyway.

E-MAIL TO THE AGENCY

Concerns : Insufficient detail will be provided to the agency so processing will be inaccurate and coverage/rating repercussions won’t be explored properly. You might get the same pile up and delayed message response potential as voice mail. There’s no way to give insureds the “We can’t bind coverage” spiel that can be done on a voice-mail message (for what it’s worth). E-mails might not be forwardable to another caller from a location outside of the agency.

Recommendations

• Be happy. E-mail is safer than voice mail. Its growing popularity actually increases your agency’s E&O security.
• E-mail, unlike voice mail, leaves a record of the sender’s actual words. Attach relevant messages to the electronic client record if your agency-management system allows it. If it doesn’t, print and file (preferably by date, or alphabetically if your agency still isn’t using transactional filing).
• Observe the same precautions, procedures, and courtesies recommended for voice mail checking, response, and forwarding.
• Add “checking and forwarding E-mail of staff who call in absent” to supervisors’ job descriptions — and don’t forget to do the same for unexpectedly absent supervisors, managers, and principals.
• Choose E-mail for your outgoing communication in appropriate situations with clients and others who are amenable. Don’t use it in most situations if the recipient is known not to check E-mail. Remember that not all communication situations are equally good for E-mail. For example, some negotiations are better done in the immediate give-and-take of a phone conversation and can drag onto infinity in E-mail. Resolution and clarity can go far to help prevent E&O claims.
• Remember, E-mail allows better time management because the CSR or account manager can finish what they’re doing and go to the incoming E-mail request with a clear head (clear heads are definitely E&O preventers). This saved time will allow more opportunity to risk manage accounts and risk counsel clients.

INTERACTIVE WEB SITES

Concerns : “The client is going to print a Certificate of Insurance in his own office-by himself?!” Clients will answer the dialogue boxes in an overly optimistic or deliberately untruthful manner. Insureds will expect coverage to be bound because (in their minds) they did it online. We lose the chance to explore nuances, ask questions, and delve into the situation. Your agency will be depersonalized in the insured’s eyes and thus easier to see as sue-able, rather than as a friend and advisor.

Recommendations

• Don’t fight this way of doing business. Clients who want this will demand it.
• Decide if you want to allow the client (or at least some clients) to print the desired product (ID card, Certificate, binder, evidence, etc.) or if you want to set up the request to go to the CSR or account manager for action.
• Use the time saved by the insureds doing the entry to think about their request or situation and reply personally or by E-mail with relevant advice, follow-up questions, and coverage suggestions. If necessary, change your conception of a CSR as an order-taking processor to an account-managing client counselor and friend. Interactive Web site usage will allow us to fulfill the predictions that insurance agents will become more relationship-builders than information-gatherers.
• Remember that the information in your system will now be used by you and by your client — and, in the full flower of Interactive Web-site usage, by the carrier — in a seamless, paperless flow. This means that your system must be:
  • Consistent from policy to policy, no matter who its CSR, producer, or carrier is.
  • Correct.
  • Up to date. We will really have to be doing today’s work today.
• Downloads from carriers will have to be consistent with each other and with how data is input manually. For example, optional endorsements in correct fields (rather than dumped into “Remarks” fields) with consistent indicators (by manual number, manual name, or consistent and intelligible abbreviation.)
• Stay alert to the benefits of this way of doing business. There’s an actual stored record of what the insured said and wanted. There’s a clear trail of what, how, why, and when things happened. This is a vast improvement over phone calls whose documentation, at best, is simply a version of what was said or done.

ACCEPTANCE AND NEW DEFINITION OF CONSISTENCE

As we all accommodate to technology in our personal and professional lives, we’ll have to accept that different clients will want to do business in different ways. Individuals in the same family or business might prefer to use different communication media with your agency.

Although the ways that we receive and transmit information from and to Client A might differ from how we do it with Client B, the standard of care and of caring must be the same for both. The result must always be well-protected — or at least well-advised — clients who get what they want and deserve accurately and quickly, and a documented activity trail that’s easy to understand, easy to access, and credible.