Ask 100 agency folks today about E&O loss Prevention and it might not be a surprise to get at least half of them stating “it’s a necessary evil”. For someone that has spent the last 30 years involved in helping agents avoid E&O claims, this might sound like a terrible number. However, if one were to go back 20 years ago, it is fair to say that that the percentage of agents thinking “evil” thoughts on agents E&O would be at least 80%. So I guess you would say that progress has been made.
In actuality, personally I believe that a tremendous degree of progress has been made on individual’s attitude towards E&O. If one were to think back 20 years ago (we were probably just starting to think about Y2K), as procedures were developed within agencies, how often was the following question raised “is this a good procedure from an E&O standpoint”? Probably minimally. But today, this is virtually always a question that is involved in determining the final procedures and processes.
For some E&O carriers, the E&O claim frequency going back to 1990 was in the 14% area. Stated another way, this correlated to 1 agency in 7 across the country being faced with an E&O claim. Today, for some of those same E&O carriers, the number is 1 agency for every 20 (between 5% and 6%). Yet, when factoring in the legal climate, we are probably in more of a litigious society today than we were 25 years ago. Now that’s progress!
There is no doubt that Senior Management heavily determines the E&O culture of an agency by the manner in which they operate. Do they “walk the walk” and “talk the talk”? However at the end of the day, it is the agency staff that truly makes the difference since they are the ones that are, for the most part, handling the daily account servicing and sales activities.
Agents E&O is not an issue to be feared. As I have stated many times over the career, if after an Agents E&O class, the agency owner goes back to the office and puts a “For Sale” sign up, then I have failed. My goal is not to scare you (ok…maybe just a little bit). It is to hopefully enlighten you that Agents E&O is to be respected and embraced and that with the right culture and commitment, the vast majority of Agents E&O claims can be avoided.
“Agencies don’t make mistakes, people do”. This is a phrase I have used thousands of times…maybe I should patent it. Thus the E&O culture of an agency is going heavily based on the attitude of the staff. Do they fight the E&O process or do they embrace it? Developing a stronger E&O culture means having more staff each day understand and embrace the importance of E&O loss prevention.