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Agency Management  How Reputation Management Software Potentially Mitigates E&O Claims 

Larry Lipman, LarryLipman - Reno, NV 89509
Reputation: 165 - Total posts: 14
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Errors and Omissions or Professional Liability Insurance is a necessity for every insurance broker that interacts with customers.  Decades ago, when agents/brokers had a personal relationship with every one of their valued customers, problems could be solved over a cup of coffee or a sandwich at the local deli.  As society became more litigation prone and coverages more complex, issues that could be reasonably negotiated took a backseat to the likelihood of multi-million dollar settlements. There was a time when agents/brokers wanted to be a part of the claims process and assist their clients or advocate for their clients’ needs.  Over time and after many cases set various precedents, notice of a claim means giving the client an 800 number and hoping or praying that it all works out.

As a child, our camp counselor played a game where one person was told a secret.

That child then told the person sitting next to him or her and that person told the next and so on until the initial message was disclosed by the last person in line (we called it “telephone”).  When the last person stated the message, it wasn’t anything like the original message that was given. It wasn’t even close! In fact, one can assume that even the second person in line to hear the message probably heard a different message than even the primary communicator!

This issue is the basis for most coverage disputes.  A customer or prospect “hears” that something is covered and makes a decision on that basis.  When a claim occurs that the policyholder assumed was covered eventually is denied, this leads to an uncomfortable phone call or email and could eventually end up as a claim filed in court.

Despite the fact that coverages and ISO forms have become standardized and policies commoditized, consumers still do not understand or read the documents that substantiate the very coverage they pay premiums on.  With the advent of the Internet, consumers understand even less about what they’re buying and merely focus on the annual premium. To make matters worse, Insurtech startups are usually created by people angry at the industry, have zero work experience in the industry, have never read a policy until they’ve incurred a claim and yet  focus on transactions and community rather than on educating their customers. In fact, Insurtech focuses on consumers at the fringes (drone owners or renters coverage, the “gig” economy, pay by the mile auto) and lower than minimum premium policies in order to gain scale. Their consumers aren’t interested in knowing what they’re buying as much as they want the coverage at a low price.  Policy documents that could easily be emailed or PDF’d on the front end are never delivered until the customer hits their PayPal button.

It’s been said that a “sophisticated” buyer is one that has had a claim denied.  New entrants into the industry will, undoubtedly, incur E&O claims as their customers incur claims which are denied or paid at a cut rate.

Despite this dire prediction, innovations in Reputation Management can reduce agent’s exposure and ideally carrier’s exposure to E&O claims and frivolous filings.  As agents/brokers adopt Reputation Management platforms, agencies are afforded visibility into disgruntled or unhappy consumers at every interaction or transaction.  No other vehicle is as critical to the mitigation of potential claims as is Reputation Management services and software.

Initially, brokers and agency owners adopted Reputation Management Software as a way of gaining new business and referrals. On that basis, it is a necessary system for every brokerage. But, that is to minimize its impact as a bell-weather or early warning system for potential claims activity.  Each time a customer has a transaction (purchase of a policy, renewal approval, endorsement, certificate, etc.) Reputation Management Software, integrated via an API with the agencies’ Management System automatically sends in the background a survey (either 1 to 5 stars of 1-10 or NPS) to the customer.  After the customer answers the one question survey, the system then follows up with a Review Request. The consumer discloses their satisfaction or unhappiness on that survey. The Software then pumps that data, like a firehose, to many social media sites built for the agent: Facebook Business, Google Business, BBB, etc.  And of course, with a widget on the Agency site, that content is published and rolled constantly so that Google’s Algorithm finds it and promotes the agency as best in their location.

When a negative survey or review is completed, that information goes right to the Owner’s desk or head of customer services’ or a compliance officer’s desk for follow-up.  By providing an immediate notice of a potential unhappy customer, the agency is able to intercede and ascertain what the issue really is….and fix it! Without that interdiction, it’s a very high possibility that the upset customer will leave at the first opportunity (causing churn and negative income due to acquisition costs), tell others how bad their experience is (harming an agent’s or agency’s reputation) or even sue based upon a coverage disagreement.  Without Reputation Management, the owner of an agency or the insurer of that agency’s E&O has no early warning detection system to intimate of a potential lawsuit until they receive the notice of a filing in their local superior court.

To further the need to mediate or prevent potential E&O possibilities, the use of Reputation Software influences Agent/Broker/CSR behaviour.  When a service or sales professional knows that each transaction is subject to a customer’s rating or review, they intuitively up their game. This is not a matter for debate or doubt.  Anyone who understands human behaviour knows that an interaction subject to a judgement or public review automatically adopts a higher sense of purpose and positivity to earn a good result.  We all want to be loved and we all want to earn approval. Knowing that every interaction is an opportunity to earn positive affirmation enhances the broker/agents’ service level and professionalism.

Many Reputation Management Software packages include Social Media Monitoring. 87% of unhappy customers will post their issues on Reddit, Google, Facebook, Instagram, etc.  This can cause an avalanche of “me too” posts and empathy posts. The more “likes” and shares, the more likely that data can be used as evidence of an agency’s lack of responsiveness or sympathy for an unhappy customers’ experience.

There can be no doubt that E&O claims not only hurt an agency’s public perception and reputation but damage the morale of the agency and cause the agency to focus on the litigation rather than on new business or ongoing customer service.  It’s a costly distraction in every way.

2 year(s) ago
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