Burand’s Agency E&O Blog: Tip #20

By | Burand's Agency E&O Blog | January 23, 2013

Do you have standardized procedures? One of the terms key to understanding E&O exposures is, “invariable practice.” In other words, does the agency invariably follow the same procedure every time? The point here is that if an agency follows the same procedures every time, all clients will be much more likely to be treated equally and the consistency created greatly reduces the number of mistakes made, which in turn also reduces E&O exposures. Standardized procedures also reduce expenses because when they are written, taught, and implemented effectively, the time required to service an account decreases.

The only argument I have ever heard for not having procedures is that if the agency makes a mistake, the plaintiff’s attorney cannot point to the agency person for not following procedure. That is a poor argument because the fallback position is, “So, you have no procedures and therefore cannot fail to follow procedures which in reality means the agency has created an environment in which being sloppy has no consequences, correct?” You may win the battle, but you’ll likely lose the war.

The only time this might work is if the agency has exceptionally good training and best practices procedures that are followed perfectly even if those procedures are not in writing. The fact is most agencies lack the discipline to make this strategy succeed so having standardized written procedures will decrease E&O risk, decrease new staff training time, and increase profits. What are you waiting for?

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About Chris Burand

Burand is the founder and owner of Burand & Associates LLC based in Pueblo, Colo. Phone: 719-485-3868. E-mail: chris@burand-associates.com. More from Chris Burand

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