E&O – Education The Key To Avoiding E&O Claims?

Upon returning back from to his room, your client calls you in a heightened state of anxiety to advise you that they are on vacation, he discovers that the diamond in his wife’s ring appears to have fallen out of the settings and is gone. ”At least we have insurance on it” are his next words.

Fortunately this story has somewhat of a good ending as your agency proceeds to advise him that “yes, it was insured and we will go ahead and file the claim”. A couple of years prior, the story would not have had the same ending but the agency had made a conscious effort to educate their customers on what their insurance covered and what it didn’t.
So how educated do you want your clients to be? If you are an agency like the one above, it is clear to see the advantages. They sold a jewelry floater for this customer, thus realizing some commission. They also have a customer that will now benefit from the insurance they purchased. It is not hard to imagine that this customer will tell friends and associates how fortunate they are to have their insurance with you. Turn this story around and you would now have a customer that has lost a precious piece of their love only to find out that they had no coverage for their loss. This is when E&O claims can rear their ugly heads.
Start with your staff
Certainly a key aspect of customer education starts with the staff. To ensure an educated customer typically requires an educated staff. After all, the staff, typically the CSRs, are the ones that will be interacting with the customers on various coverage issues. For the staff to be able to provide quality coverage information, they need to know their products. They need to be educated.
Starting with your staff, on-the-job training, along with coursework, will probably play a central role in achieving the desired technical knowledge. Since it is fundamental to your organization to have competent, highly skilled staff, look to establish a budget earmarked strictly for education. This is extremely important and their education should serve your agency well. To ensure a keen focus on education, build into each employee’s annual goals an objective focused on enhancing their technical competence. Determining the appropriate coursework should be a collaborative effort so the staff has “skin in the game.”
Make strong use of Staff meetings
Agency staff meetings provide a great opportunity to educate the staff on technical issues. Each time you meet with the staff, review a technical issue. It could be a topic the staff is less than comfortable with or a question your customers frequently ask. The various Exposure Analysis Checklists are also extremely valuable in providing extensive technical and underwriting information on hundreds of different SIC classes of business. These checklists enhance the staff’s knowledge and are more than just a tool to identify prospects’ or clients’ exposures. They will assist greatly in helping your producers/account executives become “experts” on the various classes of business and the exposures they present.
Uncover the issues
How confident are you that you know the exposures of each of your customers? This can change fairly often so even if you knew the information last year, there is certainly the possibility that it has changed since then.  
Ideally, it would be great to sit down with each of your customers to do a face-to-face account review. This will enable you to ask all of the key questions and provide them with further in-sight on key coverage issues. This would have extremely beneficial prior to Super Storm Sandy to educate customers on the various nuances of flood coverage. One option to consider is to either develop or use one of the personal lines questionnaires found in some of the various Exposure Analysis Checklists. The goal would be to send this questionnaire out to each customer (in paper or electronically) requesting that they review it and advise you of their responses. Certainly this questionnaire could help to stress the importance of a face-to-face meeting. If possible, developing a section on your agency website addressing each of these issues can help provide your customers with key coverage issues and considerations for each of the questions in the questionnaire.
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