E&O Insights: Where Is Your Agency in the ‘E&O Marathon?’

There are similarities between deciding to run a marathon and managing your agency’s errors and omissions (E&O) exposure. Very few people, if any, can wake up one day, decide to run a marathon and then, without training, run it. A plan must be established and then executed with a fair degree of precision. Having “reality checkpoints” is a good indicator as to where you are in your preparation. A similar approach has merit in the world of agents’ E&O loss prevention and the establishment of a strong E&O culture.

An appropriate question to consider is, “are you a better E&O risk now compared to last year at this time?”

With one year coming to an end and another ready to begin, this is an ideal time for agencies and their staff to assess their E&O culture and commitment. Honesty is critical for this exercise to have any real benefit for the agency and each staff member. Are you making progress? This is what long-distance runners ask of themselves periodically as race day approaches.

While few, if any, agencies are “perfect” at E&O loss prevention, many agencies exhibit an extremely strong culture corporately and individually. It is obvious that they decided to “run the E&O marathon” and made the commitment to achieve the desired results by a specific time. And, bottom line, they did it. They established their focus and kept that focus right to the finish line.

Assessing an agency’s E&O culture involves many factors, including staff education, customer education, enhanced documentation expectations, producer training, file auditing and more. Here are some important areas to help you assess your agency’s current E&O culture.

Management ‘Walks the Walk’ and ‘Talks the Talk’

An insurance agency’s E&O culture starts with its management and leadership. It is imperative that the staff sees and believes that management is committed to a strong E&O culture as this commitment will heavily drive staff behavior. Strong support and feedback are required for staff to run the E&O marathon. E&O is a serious issue requiring an “all in” commitment by every staffer – and that starts at the top.

Staff-Level Technical Proficiency

All staff members must have the necessary technical expertise. After all, your customers count on the staff’s know-how on a wide range of insurance matters. As performance reviews are conducted, it would be prudent to identify opportunities for technical training for each employee and to include these opportunities as 2015 goals. As with the goal of running a marathon, the goal for each staffer is to be “better today than you were yesterday.”

Are You Educating Your Customers?

Many agencies would contend that the best customer is an educated customer. This degree of education won’t “just happen.” Customers need your assistance. Ask yourself if, within the last year, your agency has undertaken or enhanced a campaign to educate customers on various coverages and how these coverages respond.

There are many approaches to take, including producing a newsletter (paper or electronic) to send to customers. How about delivering the message in bite-sized pieces via a weekly “Did You Know?” e-mail blast? (such as “Did you know that the homeowners policy does not provide for flood? For a free, no-obligation proposal, please call Susie at the agency.”) This can be effective because shorter messaging has a greater chance of being read.

There isn’t a shortage of topics, either. Consider starting with seasonal issues (Valentine’s Day, kids going to college, boating, etc.) and the coverage exposures each presents. Another approach is to start a blog covering the same topics. Customers would then sign up to receive access.

Another great approach is to perform an annual agency review for each customer. This will help customers understand their coverages and may also identify any exposures that are not properly insured. While it may be difficult to have a dedicated conversation with each customer, at least make the offer. Many agencies send every personal lines customer a checklist to review, with the request that the customer either returns the questionnaire or contacts the agency for further discussion on some possible uninsured exposures.

Quality and Timeliness of File Documentation

Good documentation is to E&O loss prevention as the right sneakers are to running. Documentation should be handled promptly and professionally – and with the necessary detail. Two good rules of thumb for documentation are:

It should be at a level enabling another staff member to review it and easily identify any issues or open items in the customer’s file.

You should not put anything in a file that you wouldn’t want a jury to read.

Are You Auditing the Files?

In the running world, it sometimes takes a practice run or actual race to assess how well you are doing and whether you are making progress.

In the world of agents’ E&O loss prevention, performing periodic audits is the key to measure how well the agency and each staff member are doing. Randomly reviewing actual files on at least a quarterly basis as part of the agency’s routine will enable you to truly assess the E&O culture and commitment of the agency staff and how well the various agency procedures are being adhered to. This will show the commitment that the agency has toward a strong E&O culture. It may also identify the need for further training on various agency procedures.

If your agency was running an “E&O marathon,” how did it do? Are you now in better E&O shape?

While you may not be where you want to be, give yourself credit if progress was made, and then look for 2015 to be the year when your agency really hits its stride.