From time to time, I become aware of agencies that have not officially implemented an E&O loss control program. They may have addressed some of the key issues but without any real formal recognition of the need for an increased E&O awareness. Some of the agencies feel that they have not had any E&O activity, so they are concluding “we must be good”. Maybe they are good, maybe they are just lucky.
All agencies need to understand that a solid E&O culture does not just happen; it takes solid planning and an effective implementation.
In the planning stage, some key areas that should be addressed include (but not limited to) the following:
– Established and documented procedures / work flows for the processing of work. This will help to ensure that the work is being performed in the manner expected.
– Exposure Analysis reviews / checklists for both new and renewal business.
– The need for standardization of the gathering of information and the presenting of proposals (proposals should contain the various key disclaimers)
– Written confirmation of purchase decisions (at inception and mid-term)
– Policy checking to ensure that the policy is accurate
– Documented procedure for the handling of certificates of insurance
– Documentation of various discussions not only in the agency system but also with documentation back to the client memorializing those discussions
– Complete understanding of the standard of care that agents will be held to. This includes an understanding that agents will be held responsible for what they say and what they put in writing.
– The timely execution of written binders and the avoidance of the use of “oral binders”.
However, even for the agencies that have designed an E&O program that includes these areas, this is only part of the equation. Where the “rubber hits the road” is in the implementation. The key is getting the buy-in, the commitment from the staff that following established procedures is not only necessary, it is a requirement.
Execution is essentially the difference-maker! Execution among the various staff levels that each will do their part in the established process. Without this type of commitment (especially from the producer rank and file), the results will not be at the necessary level. E&O claims will continue to occur and since all E&O policies have a deductible, the financial bottom line will be impacted. Securing this type of commitment should include a group session as well as individual sessions with each staff member to communicate the reason for the E&O loss prevention program and how important their role is to the future success of the program.
To achieve a strong level of execution requires a rock-solid commitment from Senior Management. They need to “walk the walk and talk the talk”. So the design and implementation of an E&O program is really not that difficult. The key is getting the commitment from each and every staff.