E & O — Excessive time & Obstinate employees
Have you ever put yourself (hypothetically) in the position of an agency that has to defend itself against an E&O claim? Or better yet, have you ever had to defend against one? If not, then as a business owner or manager, you owe yourself and your agency this little exercise.
Ok, something horrible has happened to one of your clients — let’s say the family’s house has burned down. Now, you are thankful because no one was hurt and they do have a homeowners’ policy in force. But, you know what? The policy has not been reviewed for the past five years, and (in some alternate universe) home values have gone up (ok, stay with me, no inflation guard with this company). They find themselves significantly under-insured and cannot rebuild as they would like.
Your client feels neglected and defrauded and they want recompense. Who do they go after? Well, suffice it to say, you are likely on their list.
What is your first step? How do you prepare? Well, you should first go in and pull all the relevant account information for that client. What policies do they have in effect? Look in the management system: Check. What were their limits, what coverages and endorsements did they have (again the management system): Check. When was the last time someone at the agency spoke to them or reviewed their account? Uh, oh, don’t see anything in the management system — let’s look at the old paper file. Hmm, that was last updated in 2003 (because we went to electronic filing). Not much to stand on.
As you can imagine, there may not be much to pull together. If it’s not in the system, it didn’t happen (a mantra I like to repeat over and over again to our clients). This is how the judge or court will also look at it. Why isn’t anything there? Could we really have not spoken to this client in five years? Maybe … or maybe agency standards and workflows were a little lax.
Well, how much time would it have taken to do an annual account review to make sure everything was up to date? Not much, and, if done at renewal, it would also have been a perfect opportunity to round the account or check for adequacy (are the limits high enough?) Better yet, an account review shows your clients that you are looking out for them and providing them with the service that they expect from their agency. All said, a well-designed (and enforced) renewal workflow or account review workflow can take 5-10 minutes (probably more for larger commercial accounts — which no doubt already get this kind of attention).
The good news is that your agency management system already has tools and functionality that should make this task easy. An account summary page and a form letter from you, which you fill out with the client’s information, as well as any activity or diaries entered since the last review and renewal, are the basic tools you need and are right at your fingertips.
Using the management system as it is designed not only provides you with a relatively easy way to do this check, it also provides evidence in the form of activities or diaries that would be generated during this workflow — invaluable to you if the worse-case scenario described above were ever to occur. Standardized workflows would also provide the proof in the form of activities and diaries in the system that proactive management would have needed to ensure that things were running smoothly (as shown in their management reports).
It is this simple… your agency management system is your best E&O prevention tool. So what’s holding you back and keeping you from not spending Excessive time and from training Obstinate employees how to better use their systems? You may just see the excellent side-effect of making your agency more productive, profitable, and less vulnerable to E&O claims. - JHH