(December, 2010)

Insurance agents and brokers perform duties that, in some areas, are regarded by the insurance-consuming public as professional-level services. Since insurance clients rely heavily upon the advice they receive from agents and brokers, the exposure to lawsuits involving allegations of malpractice is high. This section offers information on how agents and brokers might minimize their vulnerability to E&O losses.

Office Procedures

1. Document everything! It is critical that you create reliable, accurate documentation of your dealings with clients
companies, applicants, etc.
2. Regarding Binders:
    · Send copies of binders to insurers on the day they are issued.
    · Never exceed your binding authority
    · If in doubt about authority to bind, contact the respective insurer
3. Use either an application or a binder when handling client change of coverage requests.
4. Never guess; always check to be sure.
5. Use constant care in completing orders.
6. Double-check coverage when making a change in the original policy.
7. Be realistic when describing coverage to an insured.
8. Create and use a tickler file for Reporting Form policies, to remind insureds about reports that are coming due.
9. Only put down what the customer has submitted
10. Always check concerning coverage deductibles and advise the insured at the time losses are reported.
11. Never exceed your authority, particularly in telephone conversations with insureds and companies.
12. Use extreme care in handling the mail to be sure that correspondence from insureds is not misplaced or
is put aside without being reviewed.
13. Always follow instructions, whether they are those of your employer or one of your companies.
14. Always give deliberate and careful thought to assembling policies, if that is part of your job.
15. Always file renewals and binders in their proper place.
16. Promptly report losses and occurrences that may lead to third party claims.
17. ALWAYS forward premiums to the agency's carriers (and do so on time).
18. Never make an improper cancellation.
19. Continue your insurance education by reading recognized technical material and periodicals regularly, and examining all new and revised policy forms.
20. Confirm in writing the insured's declination to purchase important coverage or limits. "Not wanted" and the insured's initials on written recommendation is sound procedure.
21. Never sign any document on behalf of a client.
22. Create procedures on the proper way to use electronic mail, how it is backed-up and stored.
23. Do not use electronic communications inappropriately, or as a substitute when hard-copy documentation is necessary.
24. Create and adhere to adequate procedures on all documentation filing and storage.

Other Operations Considerations

Besides paying attention to the procedures followed by the agency or brokerage, there are other items that must be considered including whether all persons in the operation is getting the necessary tips and training to exercise professional liability loss prevention (including clerical and independent contractors). It is also important to assign someone the ongoing responsibility of monitoring current, "hot" issues that may create new sources of liability.

Besides being aware of current issues, it is also important to examine whether information is being communicated effectively to all relevant personnel. An operation should explore the methods and sources it uses to share information and training. Does your operation review the information to make sure it remains both accessible and current? Other important considerations are evaluating the timing of delivering training and information as well as recognizing (and communicating) the benefits of a solid loss prevention program such as enhanced service, gaining premium credits, improved goodwill/reputation, account retention, etc.

Training and Continuing Education

Your operations should evaluate the need for continuous training and education of your staff. A higher level of knowledge and a commitment to keeping skills current and sharp are valuable in servicing clients and business partners. Further, performing at a professional-level will result in greater good will and trust; both factors that may mitigate conflict and facilitate opportunities to address possible errors before they escalate into lawsuits.