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Tips for helping reduce professional liability loss

1. Commit to quality

An organization wide commitment to quality service is an essential ingredient for reducing the risk of E&O liability. Implement the intent through repeated reminders combined with periodic Kaizen events (regularly held meetings attended by the persons involved in a process intended to review and effect improvements in that process).

2. Provide professional training

A training program not only exhibits a commitment to quality but also helps keep an organization sharp – both as to internal and external client needs and best practices.

3. Understand coverages and policies

Insurance agents and brokers provide a professional service and are not just order takers. Clients expect knowledge and good advice.

4. Document standard operating procedures and audit compliance with those procedures.

Repetitious activities need to follow set work flow and quality procedures to reduce the risk of errors and omissions. Procedures should cover processes for taking in new clients, appropriate content and submission of applications, following up on applications, verifying that coverage was written as ordered, issuance of certificates, cancellations and non-renewals, and any other regularly performed processes in an insurance agent’s or broker’s office.

5. Monitor for effective communication

Monitor the communication content, style, and quality of your workers. Poor communication may cause misunderstandings, disputes, and E&O claims.

6. Create accurate records

Devise a good record keeping system and adhere to it. This helps avoid the “he said, she said” scenario that may contribute to an E&O claim. Inadequate documentation often increases defense costs and uncertainty in the outcome of E&O claims.

7. Maintain professional relationships

Maintain a professional, cordial relationship with your clients. Be responsive to inquiries and client attempts to communicate. Treating clients well can translate into less friction, disputes, and E&O claims.

8. Act as a professional

Being too agreeable and just ordering what the client asks for, can lead to trouble. As a professional, the Insurance Agent’s or Broker’s best practice would be to document the offering of a broad range of coverages and efforts to protect the client from decisions based on price alone. An underinsured client who saved some premium by making a decision based just on cost can later become an E&O claimant.

9. Respond promptly

When a dispute arises, put the fire out quickly – before it gets worse. Items not promptly responded to may often become problems and problems that are not promptly addressed tend to get worse.

10. Work toward resolution and closure

If an E&O claim cannot be avoided, it is not too late to limit the consequences. Understand the problem from the client’s point of view. Work with defense counsel and the insurer toward resolution of the issues.