E&O Tip – How Enhancing Your File Documentation Can Make Your Customer More Accountable

For years, E&O seminars have heavily focused on the issue of documentation. This is primarily due to the premise that the quality and depth of file documentation is a major factor in determining which direction an E&O claim goes. Solid documentation can literally stop a potential claim in its tracks while poor documentation may hurt your agency defense more than you can imagine. 

Most agencies have an expectation for documentation. Is this expectation actually documented and thoroughly known by all staff? It should be if you truly want to instill in your agency the importance of documentation. Some of the areas where documentation is critical:
The phone – the issue isn’t whether agency staff are aware that phone messages need to documented in the paper file or in the agency management system; most staff are well on board on that issue. The primary issue deals the depth of the documentation and the timeliness of when the conversation is memorialized. What if the documentation read “spoke with insured regarding homeowners’ coverage”? Is this acceptable in your agency? It shouldn’t be. If someone else picked up the file or read the notes in the system / file, would they totally understand the essence of the conversation? If not, then your documentation is not at the necessary level. In addition, for producers or actually for any agency staff that utilize cell phones to interact with customers, carriers, etc., are those conversations being documented in the system as well? They need to be! 
Did you totally understand what the customer was asking or did the customer totally understand what you told them? Maybe, maybe not. Probably every day, there are conversations that occur where there was a misunderstanding between what the customer told you and what you heard. When are those misunderstandings discovered? Typically at claim time. As a result, simply documenting in the agency system what the customer told you (or thought they told you) is not enough. What is the solution? The most effective means is to document back to the customer your understanding of the conversation. This should be in writing and for many agencies that have adopted this approach, a quick e-mail or letter is doing the job. Something to the effect of:
Mr. Jones, per your request, we have deleted all coverages on 410 Main St. If this is contrary to your understanding, please contact the agency as soon as possible.
Maybe they really only wanted the property to be deleted but the liability left in force
What this accomplishes is that it puts the responsibility on the customer to advise you if what you heard is not what they requested. The goal is to identify any misunderstanding before the claim occurs, not after it.
As you provide proposals for your customers, be sure to provide options for consideration. In other words, just don’t provide a proposal for $1,000,000 umbrella; provide options for greater limits as well. This will let the customer know that higher limits are available and that you not “recommending” a specific limit. In addition, requesting their sign off on the options that they don’t want to pursue is extremely valuable and highly recommended.
In addition, include in your proposals the definitions and explanations for key terms and phrases. This will greatly assist your customer is understanding the coverage that they have and how it works. At the end of the day, this makes them more accountable.
If the discussion deals with the multitude of “what if” questions involving issues such as “do I need to buy the physical damage when I rent a car” or “I see that my policy has a co-insurance provision – what does that mean?” These discussions need to be thoroughly and promptly documented not only in the agency file but with a letter back to the customer. If you knew that the customer was documenting the conversation, would you approach it any differently? Good, because they probably are. 
To ensure that the staff knows the importance of documentation, there are a couple of approaches to consider. At virtually every staff meeting, the issue of proper documentation should be discussed. In addition, as quality control reviews of each of your staff member are performed, the issue of documentation should be addressed and evaluated. The focus should be on the quality and timeliness of the documentation. In addition, while it is understood that abbreviations may be in order, the agency should develop a list of acceptable abbreviations to avoid confusion. Also establish guidelines for when the documentation should be entered. The greater the time between the conversation and the documentation, the greater the chance that the information is not as complete or as accurate.
Probably from time to time, the discussions that occur between the agency and the customers can get a little emotional. When you look to document these discussions, be sure to keep the notes professional. Something like “spoke with Curt regarding his homeowners insurance – can’t believe that we insure someone so stupid in our agency”. Might be true but definitely not appropriate for the file as all levels of documentation are discoverable in the event of litigation. Look for your documentation to pass the jury test; there should not be anything in the file that you would not want a jury to read.
Although the main aspect of this discussion dealt with documentation with your customers, it is equally important that conversation with your carriers, wholesalers, etc. be documented. Once again, the file should speak to all of the discussions that took place. Without documentation, it will be your word against theirs and it is hard to say who is going to win.
While quality and timely documentation may not prevent you from an E&O claim, there is no doubt that there is nothing as important that will determine the direction that the claim goes more than documentation. It also might make your customer more accountable for their buying decisions.



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