4 Best Practices for E&O Preparedness

Practices for E&O Preparedness

You spend hundreds or even thousands of dollars purchasing E&O insurance protection each year. Your clients count on you to know the laws and regulations regarding the products that you provide but no matter how careful you are, you could make a mistake that results in a negative effect on a client and a lawsuit for you.  Without E&O insurance you are putting yourself at risk in the case of a dispute that could put you out of business very quickly.

Unfortunately it's not as easy as just purchasing the insurance and carrying on with your business as usual. Proper and up-to-date documentation is required for yourself and in order to protect yourself in the case of a lawsuit you should be keeping record of all client conversations.

Curtis Pearsall of Pearsall Associates makes the following suggestions regarding E&O protection and prevention:

Be sure to develop and maintain a clear and documented procedure detailing the expected and accepted usage of automation. There is no doubt that two agencies can have the same agency management system but use it differently.

To ensure compliance, agencies should perform periodic quality control measuring the manner in which each employee is using the system comparing it with the expected approach

There is no doubt that documentation that is timely and professional can make all of the difference in the world in how an E&O claim is resolved. Agency management should make it clear to all of the staff the importance of timely and accurate documentation in the agency management system. They should also stress with the staff the importance of keeping the documentation in the system professional and clear.

When an agency has an E&O claim, the defense attorney assigned to your agency will request a copy of your file, paper as well as electronic. Thus documentation that has been entered will be part of the discovery process and the last thing you want is to have some of this documentation be negative and harsh of your customer.

Keep it professional. Also, since abbreviations are common as a means of gaining efficiency, the agency should come up with a listed of acceptable abbreviations for the staff to use. Basically, the goal is that anyone should be able to review the file, paper or electronic, and know exactly what the issues are and what the status is of any unresolved matters.

In an attempt to identify and resolve any potential misunderstandings between the agency and customers or prospects, it is highly recommended that the agency staff not only document the conversation in the system but also document back to the customer the essence of the conversation. Obviously it is best to identify these potential misunderstandings before the loss as opposed to after it.

As Curtis pointed out, automation with an internal documentation process in place can help prevent claims from being filed and provide protection if/when one is filed.

4 Best Practices for Proper E&O Preparedness:

Create standard operating procedures for note taking:

  1. Keep it professional: Make sure everyone in your agency is clear on the purpose of note taking in your agency management system beyond internal reference. Make it clear that these notes could be seen by more than just those inside of the agency. Clear expectations should be set as to what is and is not appropriate for client notes stored in the system.
  2. Get on the same page: As Curtis mentioned, having a standard set of abbreviations used by the agency can quickly and easily improve efficiency. Many people use abbreviations when taking notes but not everyone uses the same abbreviations which can cause confusion all around. A recurring meeting to be sure everyone is clear of expectations and on the same page can be a lot less of a hassle than a large E&O dispute.

Use your agency management system to get organized:

  1. E&O document storage: You should be storing up-to-date E&O documentation forE&O example each of your active agents. A copy of each agents E&O policy should be very easily accessible in your agency management system. Also, you should be storing the expiration date of that policy in order to create renewal reminders.
  2. Conversation tracking: Any and all conversations with prospects and clients should be summarized and stored in a manner that cannot be tampered with. The best time to take notes on a recent client conversation is as soon as the meeting is over. If/when an E&O dispute comes up, these notes will become very useful.

To get more "best practices" and techniques for keeping yourself protected in today's tech-driven insurance industry check out Steve Anderson's webinar, "Managing E&O Exposures in a 24/7 World."

Managing E&O Exposures in a 24/7 World

This class explores various technologies being used by agencies today and the E&O challenges these technologies create. Watch the webinar and learn how to protect your agency.

View Webinar

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Mike Ivory

By Mike Ivory on October 30, 2014 in Database Management

Mike is the Marketing & Sales Operations Specialist at AgencyBloc. He manages all technology for sales & marketing operations and analyzes results to maximize our success. Favorite quote: "You miss 100% of the shots you don't take - Wayne Gretzky" - Michael Scott More articles


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