As I have reported numerous times over the past number of years, the handling of claims is and continues to be a major issue and cause of E&O claims. Some E&O carriers are reporting that upwards of 1 in every 6 E&O claims are the result of improper handling of customer claims by the agency.
When I started at the agency side of the business in 1976, I was a CSR handling S-Z for personal, commercial and claims. While I thought I was technical proficient on the personal and commercial issues, in all honesty the claims handling scared me to death. I actually used to dread a customer calling in to report a claim. When one considers that this is one of the key areas where the agency can show their value, my lack of confidence handling claims was definitely not a good thing. When I look back at those days, my lack of confidence was probably heavily due to the lack of training and guidance that I received on the proper way to handle and manage customer’s claims.
Some agencies now have a dedicated claims person and this is certainly a positive step. However, since most agencies provide vacation for their employees (I hope so), what happens when the claims person is on vacation? How are claims handled? I doubt that customers are advised to “call back next week when our claims person is back from vacation”. Obviously during these times, other staff (account execs, etc.) are now put in a position to handle those claims. Do they know what they are doing and are claims being handled in the same manner as the claims person?
To address this situation, agencies should look to develop a claims procedure manual that speaks to the proper manner and procedure for handling first and third party claims. What adjusters should be assigned and when, what if there a question on whether there is coverage, when to put the excess carriers on notice on liability claims, what do I document in the system? There are just some of the issues that need to be clearly addressed in the claims procedure guide. Without a guide, employees may fumble their way around the handling of a claim. When this occurs, the potential for a mistake or “error or omission” increases dramatically.
If your agency does not have a claims procedure guide, look to develop one over the next couple of months and then meet with any applicable staff that may be faced with the task of handling a claim to get them trained. I sure wish the agency that I worked at had this. I would have had a lot more confidence knowing that I was handling claims the proper way.