A simple approach to start Auditing

While more and more insurance agencies are performing some degree of auditing, there still are a number of agencies that either don’t see the value in auditing or possibly feel that they just don’t have the time or resources to do it.

Auditing is actually one of the most important components of a quality E&O culture and commitment. Without auditing, how would management within the agency really know to what degree the staff is performing based on the expectations that have been established?

Personally, I think the best approach is to get started and while the degree of auditing may be limited, it is still better than not doing any auditing. Consider this approach for getting the ball rolling…..

At an upcoming staff meeting with just the personal lines staff or just the commercial lines staff, go into the agency management system and pick a file, any file. The goal would be for the staff in the meeting to objectively critique the file and the manner in which it was handled. What was done well and what could have been done better. Actually to ensure that no one feels “picked on”, might be appropriate to pick a file for each member of the team attending the staff meeting. Also, it would be best for all files to be either new business or a renewal account.

The object would be review issues such as:

– How were the exposures of the risk identified or was the coverage simply duplicated based on what the customer had? If it is a renewal account, is there any evidence of the pursuit of a renewal questionnaire to get an update on the exposures?

– What is the quality of the documentation? Does it tell a story? Was the documentation done promptly and accurately? Does it identify the who, what, where, why and when? How would everyone feel if that file had a problem and the documentation needed to strengthen the defense of the agency?

 How was the documentation of coverages rejected handled?

 Is there evidence that the policies were checked for accuracy?

All of the above are key issues that should be part of a strong E&O culture. One of the objectives would be to educate the staff on the benefits of each of the above items. It is important to state that the objective is to begin, starting today, to do things better that will help minimize the potential for an E&O claim to develop. There should be no “gotchas”. Hopefully everyone will see some files that were done extremely well and can serve to be an example of how things should be handled moving forward.

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