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Scary consequences hide behind E&O claims

E&) claimThis is the month when we think about the fun Halloween costumes we’ll get for ourselves and our children. Haunted houses are intriguing and “ghosts” jumping out from hiding places are greeted with laughter. Not so when that knock at the door brings suit papers. Think of how scary it would be to realize you had not properly documented your client’s file and the ensuing “he said-she said” leaves you with nothing to support what transpired during the course of meeting with your client and educating them on their product selection.

As an agent, you may know all too well the types of allegations that arise in an errors and omissions claim. Perhaps you’ve heard horror stories from colleagues who have personally gone through that arduous process. Most E&O claims typically involve similar themes and types of allegations. Generally, the party initiating the claim will assert an alleged failure to meet a professional obligation or a breach of duty on your part. Many claims are based on a perceived mistake in accurately understanding a client’s need and risk profile, and subsequently a failure to secure adequate coverage. Some claims may assert a shortcoming in the preparation of client documents, and accuse the agent of not accurately completing application materials necessary to procure coverage, or of missing assigned deadlines. The most unpleasant claims allege intentional wrongdoing, and of course, there are always those that are completely without merit.

You can prevent the frightening prospect of an E&O claim by establishing Best Practice Standards for all aspects of your business. These standards will significantly minimize the potential for a claim. Formalize a standard process, workflow and set of procedures for all business-related activities in your insurance operation, including client assessment, client communication, product education and file maintenance.

Best practices will foster a business where knowledge, attention to detail, consistency and communication are valued. They will raise the level of excellence you deliver in your service and product offerings. Some of your primary duties as an agent include understanding the products that you recommend and determining their suitability for each client. You are also obligated to ensure that your clients understand how the products work. Once you implement best practices that require extensive attention to detail, you will not only minimize the potential for an E&O claim, but you will also provide better service to your clients.

While you cannot predict when or if a claim may be brought against you, the standardization of best practices should give you the peace of mind that comes with covering all of your bases. After all, the only ghouls knocking at your door should be the ones asking for candy on Halloween!

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