By Angelo J. Gioia, AgentsofAmerica.ORG The key to an agency success and aEURoeAvoiding E&O ClaimsaEUR? is understanding what is important to you and more importantly understanding on how to protect and enhance your agency three most important assets: Agency Reputation, Client Base, and Staff. Thru our partnership, alliances and affiliations with the industry leading experts and providers, AOA has become one of the nationaEUR(TM)s leading resources for connecting agents with industry professionals, highly relevant news, agency revenue building products, risk management & loss prevention services, career opportunities and continuing education. Protecting your agency reputation, it takes years to build and just one mistake to destroy, Minimizing and avoiding E&O claims just donaEUR(TM)t just happen, ItaEUR(TM)s takes a strong commitment from the entire organization from the agency owner on down for an agency to possess a strong E&O culture and mindset. They all need to understand the issues and exposures facing them and to then take the steps necessary to minimize the potential of facing an E&O claim. At AOA our goal is to provide this information in a format that will enable the agency staff to understand and utilize in ever and all situations when working with their clients and customers. These tips could be a perfect topic for your agencyaEUR(TM)s next staff meetings. The insurance landscape, marketplace, and regulations are constantly changing. Moreover, with the rise in claims comes the rise in appeals stemming from those claims; the body of appellate law relating to errors & omissions claims against insurance producers is growing along with the frequency of claims. When a disaster strikes and insuredaEUR(TM)s have inadequate coverage, E&O claims are not far behind. There is no shortage of new, insurance-related issues. These aEURoeTipsaEUR? provides a resource through which agents are able to immediately address and take action, educate their staff on such constantly-changing issues. Claims made against insurance agents can derive from many sources, these include quoting and proposing coverage, incomplete and inaccurate applications, written and verbal binders, uninsured exposures, including many others. Know the Rules & Follow & Understand the Basic 1. Use care when explaining or delivering "all risks," comprehensive, and specific coverages. All policies have exclusions. Explain them to the insured and put it in writing. 2. Confirm in writing the insuredaEUR(TM)s declination to purchase important coverages or limits. 3. Explore every marketaEUR"standard and excess and surplusaEUR"before advising an insured coverage is not available. 4. Advise insureds in writing if needed coverage, previously unavailable, can now be written. 5. Do not indicate to your client you can place a policy until you know for certain it can be placed. 6. Do not place property coverages until you have physically visited the premises to be insured 7. Stay within your own field and expertise. Know your products thoroughly. Have all proper licenses. 8. If you donaEUR(TM)t know, say so. Find out and report back in writing. 9. Never reveal you are insured for errors and omissions. 10. DonaEUR(TM)t complete or sign an application on behalf of your client 11. DonaEUR(TM)taEUR(TM) advance premium 12. Document all conversations and phone conversations either in writing or by emails. 13. When meeting with your client to discussed their insurance needs or changes to their existing insurance, donaEUR(TM)t assume his responses or ask leading questions as a simple way to getting a response to what you want to hear in an effort to write a policy? 14. Promptly handle problems or complaints. Summarize the client's needs. Confirm your discussion with client in writing. 15. Be honest with your carriers and markets the basis of the relationship between the agency and the carriers it represents is heavily based on trust. When providing your carriers with submissions, there is an expectation that the application truly represents the quality of the risk. This is the only way that the carrier can truly assess their appetite and determine the proper premium for this exposure. If you were to mislead the carrier into writing a risk that they believe is better than it really is and that aEURoeerroraEUR? was discovered, you will seriously damage your reputation in the industry and also that of the agency you work for 16. DonaEUR(TM)t generalize & pay attention to the details. 17. Make sure you completely understand the coverage that they have and if you are replacing existing coverage you provide your client with policy comparison. 18. DonaEUR(TM)t Assume Anything 19. Offer options when providing proposals for your customers, it is recommended that you provide a series of limit options for the customer to consider with a statement noting that higher limits may be available. The goal is to help educate the customer and require that they make a decision on which option they are selecting. 20. Get sign off on coverage not desired. When providing proposals for your customers, there is certainly the possibility that the customer will not secure all of the coverages proposed. When this occurs, be sure to require that the customer sign for those coverages that they are not securing. 21. Documenting interactions with carriers & markets. Oftentimes, it is necessary to contact the carrier on various coverage and underwriting issues. To ensure that there is no misunderstanding on the information communicated and that there is a solid record of the conversation, take the time to document the key conversations. This documentation should not only be in the agentaEUR(TM)s system but also with an e-mail or letter back to the carrier restating the matter and resolution. If a problem were to develop, this documentation could be instrumental in absolving your agency of any wrong doing. 22. Moving coverage from one carrier to another, are you looking to move an account to another carrier? If doing so, be sure to identify any areas where the replacement policy is inferior to the expiring policy. This could include areas such as the scope of coverage, rating of the carrier, sub-limits, exclusions and definitions. It is highly recommended that these differences be brought to the attention of the customer for their approval and sign off. This documentation should be retained in the agency file. 23. Signed application, after the completion of an application, require the customer to review it to ensure its accuracy and then request their signature. The goal is to make sure that the agency personnel has not misstated the answers to any of the questions. By requiring the customer to sign the application, they are attesting to the accuracy of the information. Their signature on this document could play a significant role if the information is alleged to not be accurate. 24. Listen to what your customer is requesting, in most, if not all states, the producer is held to the duty of providing the coverage that the customer has specifically requested. If they are not able to provide that coverage, they should inform the customer accordingly. Due to this requirement, it is important that producers listen carefully to what the customer is requesting and that you Make Sure You & Your Clients Are on the Same Page. 25. The essence of this conversation should not only be documented in the agency file but also via some form of written communication back to the customer. 26. Broker of Record letters, when you take over an account by broker of record, it is important to realize your work is not done; in fact, it is actually just beginning. One of the key issues involves to what degree the current policies reflect the current exposures. It is best to treat this new customer, personal or commercial, as if they were a brand new prospect. Prove your value by conducting a comprehensive review of the file. This includes reviewing their current program, identifying their exposures and providing them with coverage options to consider. Using an aEURoeExposure Analysis ChecklistsaEUR? are a great tool and resource to assist you in this regard. Binders and Orders Prepare All Binders Immediately

27. Indicate the time and date that the binder is effective
28. Indicate the company, the type of coverage, property to be insured, limits, address to be insured and the correct name and mailing address of the insured.
29. Pick up the binder when you deliver the policy.
30. An oral request for a binder should be followed up immediately with a written binder, and the insured should be sent a copy. All agency personnel should be informed of agency's binder procedures. When possible, use standardized binder forms.
31. Use agency binders to effect new coverages on existing policies.
32. Do not exceed your binding authority for either limits or coverages.
33. Inform agency personnel of binding authority, and the prohibited and restricted lists of each company.
34. Binders should be executed in triplicate: the original sent to the insured, a copy to the company, and an copy in the insured file
35. Never use a binder to provide free insurance. Advise the insured that coverage is in force and will have to be paid for.

Endorsements

36. Check endorsements for accuracy.
37. Prepare endorsements at once. If that is not possible, acknowledge request in writing and issue binder.
38. Indicate on the face of the office copy of the policy that the policy has been endorsed. Include the date and whether coverage was added, deleted, or modified, e.g., increase in limits in mid-term.
39. Determine whether and endorsement or a cancellation and rewrite of the policy is the best method to accomplish a change in the policy, e.g., assignment, change of address, agent, etc. Check endorsements for accuracy.

40, Send the company copies of endorsements prepared in agency as soon as possible. If endorsements canaEUR(TM)t be prepared at once, prepare binders.

41. Use standard endorsement request forms whenever possible.

Expirations and Renewals

42. A renewal policy should be issued and delivered prior to expiration of existing policy.
43. Advise insured in writing if the renewal differs from the expiring policy. If necessary, request that the insurer issue a corrected policy.
44. Cross-check renewal lists with office expiration records and company expiration lists.
45. The renewal list should be reviewed 90 days prior to expiration, and the insured contacted so any changes can be made.
46. Advise insureds in writing of non-renewal of policies in sufficient time. Obtain replacement coverage when possible. If unable, advise the insured in time for the insured to obtain coverage elsewhere. Many state insurance regulations on cancellations and non-renewals require at least 30 days prior notice of non-renewal for policies covering family automobiles, dwellings, or governmental properties.
47. Unless proper notice of non-renewal has been given, a renewal must be issued.

Cancellations

48. Valid cancellation can only be obtained by strict adherence to cancellation provisions of the policy and insurance regulations on cancellations and non-renewals.
49. Policies cancelled by the insured should be picked up at once.
50. If it is not possible to obtain physical possession of the policy, obtain a lost policy receipt signed by the insured.
51. Be certain that additional insureds, mortgagees, loss payees, governmental agencies, etc., are all included in the notice of cancellation.
52. Check office copy of policy changes in address, assignment, etc., when a notice of cancellation is received.
53. Do not divulge reasons for cancellation unless requested to by law and with immunity from suit.
54. If a policy is reinstated, make sure that the insured is aware if there is a gap in coverage.
55. Never send an invoice on a policy that has been cancelled and the earned premium paid thereon. Be certain accounts receivable records indicate clearly that the policy has been cancelled. Indicate on invoice that balances due on cancelled policies are for the earned premium.

Handling & Processing of Claims

56. All reported claims must be in writing and on claim report forms. Often, insurers prefer ACORD forms. Use or devise a telephone report form and/or log.
57. Never indicate there is or is not coverage unless you are absolutely certain.
58. Get the companyaEUR(TM)s answer in writing when requesting coverage information before relaying it to the insured or claimant.
59. Take the report and advise that you or the adjuster will be in touch with the insured or claimant.
60. Obtain the telephone number where the insured or claimant can be reached.
61. Advise the company in writing of the reported claim as soon as possible.
62. Advise the company at once of all reported claims. Use the phone in an emergency and follow up in writing.
63. Advise the insured of her or his responsibilities to protect property and to do nothing that will increase the loss. Lack of cooperation on the part of the insured could result in the claim being denied.

Handling & Processing of Binders

64. Company must be sent copies of all binders.
65. Binders must be cancelled in the same manner as policies are cancelled.
66. If the company requests cancellation of the binder, comply with that request immediately and replace binder with another company.
67. Never bind a company for coverage or limits beyond your binding authority or for which there is no authority.

Renewals

68. Check renewals issued by the company with the renewal list sent to the company.
69. If you donaEUR(TM)t receive a policy renewal by the expiration date, issue a binder or advise the company that the policy has been renewed with another company.
70. Check renewal policy for correctness. Do not assume it has been prepared correctly.
71. Do not endorse an incorrectly prepared renewal. Request that the insurer issue a corrected renewal before delivery to the insured.
72. Check renewals as to form. Form changes should be brought to the attention of the insured.

Requests for New Policies

73. Do not misrepresent the risk or withhold any underwriting information on new risk submission.
74. Applications should be completed thoroughly. Applications may become part of the policy or else statements made therein may modify or void the coverage.
75. Check the policy against the application for correctness.
76. Notify the insured immediately if the company declines coverage or modifies the coverage it is willing to write.
77. Company requests to alter or modify the coverage requested in the application should be in writing.

Office Procedures

78. Instruct office personnel that they must use your standard procedures to handle claims, cancellations, endorsements, renewals, and orders for new policies.
79. All personnel must record in-person or telephone conversations. Use a telephone memo or a call sheet.
80. Handwritten records of communications are invaluable when an agency is questioned on performance or the lack thereof, make certain client file has been documented
81. Check and re-check office personnel on compliance with standard procedures.
82. Order, prepare and deliver policies, renewals, binders and endorsements as soon as possible. Insureds and agents often forget what was ordered.
83. Review files on a scheduled basis with other members of the agency and, when requested, company representatives.
84. Establish a system to advise insureds of new policies and coverages and changes in company underwriting attitudes.
85. Upgrade your personnel by their attendance at conferences, seminars and schools relating to their functions and responsibilities in the agency.
86. Know your companies. Placing coverage in an unsound company may result in a claim against you as well as damage to your agencyaEUR(TM)s reputation.
87. Develop checklists to insure the timely completion of tasks.
88. Set up and maintain a diary system or an agency management system.
89. Set up a forms manual within instructions outlining when to use standard letters, memos, meeting reports, etc.
90. Set up a procedure for handling of premium payments including checks and credit cards.
91. Develop a system to handle clientaEUR(TM)s complaints and or comments, so that you are aware of problems immediately. Make certain all complaints, comments or inquiries are handle in a timely manner and that had a paper trail that documents any and all discussions.
92. Have a standard process in the agency for every procedure, whether itaEUR(TM)s issuing a quote, or a binder, or handling a mid-term change. And document that process each step of the way,
93. Put procedures in writing and audit staff periodically to make sure those procedures are being followed. ItaEUR(TM)s also important to update those procedures on a regular basis.
94. Make certain that your agency has an office procedure manual, set up to handle all of routinely followed procedures. Keep a manual on every employee's desk.
95. Document, in writing, each employee's scope of authority.
96. Depending upon the size of your agency, designate one person to maintain files on changes in Federal and State laws that affect your business.
97. Keep track of all staff license renewal dates and continuing education requirements.
98. Subscribe to trade journals and or publications that allows you to stay current including maintaining a close contact with the companies you do business with.
99. Attend professional meetings regularly and make certain that you and your employees participate at professional conventions and continuing education seminars.
100. Do your own due diligence, Investigate the financial strength and Best Rating of any company whose products you are selling, if you are not selling through your primary company or using an Wholesaler or MGA, check on the company's rating including their reputation for both paying and denying claims. ItaEUR(TM)s extremely important that agents keep current on the financial conditions of their carriers and, as appropriate, communicate those conditions to those customers.
101. Also to make certain you check reputation of GAs, brokerage agencies, or Wholesalers you thinking about doing business with including that they have E&O
102. Exposure Analysis Checklist, effective use of an aEURoeExposure Analysis ChecklistsaEUR? is considered by many the closest thing to a silver bullet in minimizing the potential your agency could face an E&O claim. They provide a tremendous amount of technical knowledge on over 650 SIC codes to help the producer better understand the risk. In addition, they provide a series of key questions to enable you to accurately present the risk to your carriers.

Train & Educate Your Staff

103. Devise a training checklist for new employees. Document employee's file regarding completed training. Include dates of training, subject matter, etc.
104. Depending all the size of your agency, hold staff meetings every one to two weeks.
105. Have a written meeting agenda, keep minutes and record attendees' names. Keep this information, and handouts, in your meeting file.

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