Want to Experience an E&O Claim? Here’s How

August 20, 2012
Editor’s Note: This article originally appeared in Insurance Journal’s Satire Issue, August 20, 2012. The content in this issue is not real and is not to be taken seriously. It’s supposed to be humorous. Seriously.

Have you ever wanted to find out just what it is like to be struck with an errors and omissions (E&O) claim? Well, here’s how:

10. Just document it in the agency management system. This was actually the “old school” philosophy. There is often a misunderstanding between what the customer said (or thought they said) and what you heard. The agency staff should document back to the customer the essence of the conversation. Advise them that if your understanding is not correct, they should promptly contact the agency.

9. There’s no need to go to an E&O seminar — your agency must be good because you’ve never had a claim. Are you good or just lucky?

8. Don’t worry about what you tell the client — landing the account is what’s really important. Be careful with words. Using “expert” or “specialist” has the potential to raise the standard of legal liability. Being “an advisor” instead of “an order taker” could hold you to a special relationship.

7. Binding guidelines — nobody really pays any attention to them. Virtually every carrier has taken the time to develop underwriting/binding guidelines. If your agency bound a carrier to a risk outside of these guidelines and the risk suffers a loss, chances are the carrier will not be too happy with you. A carrier suing one of their agents — yes, it is happening and with greater frequency.

6. Let your customers provide you with confidential information via social media — what’s the big deal? Specific risk information/confidential information should not be sent via social media. It should either be delivered in person or sent via an encrypted message.

5. Denying a claim in the agency — it’s not covered, so why would you submit it? Denying a claim should be the carrier’s responsibility. Even if you are 100 percent positive it is not covered, let the carrier make that decision.

4. Blanket additional insured — that means everyone is covered, right? Nope. Most, if not all, blanket additional insured forms require that a written contract must be in place between the insured and the party seeking additional insured status. There is no coverage without this.

3. You pick and choose who to follow-up with on direct bill non-pay notices. If your agency chooses to perform this duty you should not discriminate between your different customers.

2. Why check carrier-issued policies to see if they’re correct? If they made a mistake, that’s their problem. But the longer an error goes undiscovered, the greater the agency’s liability.

1. Insureds just want the lowest price. They don’t care if the coverage is less. All coverage reductions must be brought to the client’s attention. Document these discussions with the client — not only in your system, but also in writing.

Pearsall, CPCU, ARM, is president of Pearsall Associates Inc., a risk management consulting firm specializing helping agents protect themselves. He is also a special consultant to the Utica National Agents E&O program. Phone: 315-768- 1534. E-mail: curtis@pearsallassociates.com. Blog: www.agentseotips.com.

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Insurance Journal Magazine August 20, 2012
August 20, 2012
Insurance Journal Magazine

Satire Issue (Funny stories, weird claims, reader submissions and wacky ad contest.)