Mention E&O loss prevention to folks in the insurance industry and many of them will probably comment “that is scary stuff”. In fact, if you were to interview insurance agency owners coming out of an E&O class, some may voluntarily comment “That’s it, I am selling the agency”.
When it comes to E&O loss prevention, the way that we look at it will heavily determine our “buy in”. In many respects, it is a mental thing. If you view it as “scary”, you may be reluctant to ever write a piece of business or talk to a customer because of your belief that if not handled correctly, those are E&O nightmares waiting to happen. E&O loss prevention should be respected and appreciated for the benefits that it generates. And the benefits are many!
Many E&O carriers have advised me that they are able to close 60 – 70% of all E&O cases for no loss payment. There may be defense costs but no loss dollars paid. How does this happen? For one, it takes an E&O carrier that has a commitment to aggressively pursue defense of those cases but at the end of the day, it is the actions of the agency that heavily determines the outcome of the claim. Thus one benefit to strong E&O loss prevention is that you will significantly increase the chances of prevailing in an E&O matter.
A benefit that is often overlooked is the impact on sales and growth of the agency. Let’s take a quick look at some of the more common E&O “tips” that are provided.
Exposure Analysis Checklist – helps the agency understand the risk better and plays a key role in identifying the exposures of the risk. By proposing coverage for some of these exposures, you will probably write more business.
Customer Education – by educating your customer through various aspects such as social media, newsletters, account reviews, etc., you will write more business.
Quality proposals – by including definitions, claim examples, etc., this will help your customer better understand the coverage they have. No doubt, they will appreciate this, further helping your new business sales and customer retention.
All of the above will help you write more business while further assisting in strengthening the E&O culture of your agency. So, don’t be scared of E&O loss prevention – embrace it and you may just find your agency writing more business.