Burand’s Agency E&O Blog: Tip #52

Update Census Forms on AORs/BORs. When an agency takes over a group benefits account by AOR or BOR, it is likely picking up the prior agency’s/broker’s mistakes. Sometimes, for many different reasons ranging from innocent mistakes to cheating, an insured may not include all employees on their census forms. This creates the possibility that census information is wrong and therefore the possibility that some of the client’s employees are not adequately insured. In this situation, the agency may have a significant E&O exposure.

The best solution is to always obtain an updated census immediately upon receiving the AOR/BOR. Do not wait. Verify the new census against the incumbent’s census and make any corrections immediately.

The same mistake can happen in the normal course of writing and renewing accounts and the agency has little ability to control this exposure. Therefore, agencies might consider creating a disclaimer stating the agency is not responsible for claims involving employees the client does not list on their census. However, with an AOR/BOR, such a disclaimer likely only provides protection after the agency has completed a new census.