e&o and checking policies Virtual University’s Ask an Expert
ulty
VU Fac
An agent asks, "With the advent of download from the carrier websites directly into our agency management system, do we need to check the renewal policy for accuracy? We are currently investing a lot of time and money into this process and rarely find that the company makes a mistake on the renewal policy."
"I would like some feedback regarding whether or not we should check renewal policies. With the advent of download from the carrier websites directly into our agency management system and most 'paper' being shut off, do we need to check the renewal policy for accuracy? We are currently investing a lot of time and money into this process and rarely find that the company makes a mistake on the renewal policy." Quality control efforts can be expensive. However, mistakes in the form of E&O claims can be catastrophic. Below are a number of observations from the VU faculty
My experience is not as good at not finding errors. I have seen an insurer deny a claim on the basis of a mistake they made on a policy. They stated that if the mistake was not reported to them when the policy was issued, it is the agent's fault. I would not stop checking policies.
FACULTY RESPONSE
Not an easy one to answer. Unfortunately it depends if you maintain only electronic files and the agency management system allows for alerts and or exception reports providing for both the previous image and the new image to be retained then based upon your internal process you can evaluate the necessity. If you use transactional filing or you have a procedure for scanning documents identifying and attaching to the electronic file then again you can evaluate the necessity.
FACULTY RESPONSE
If, on the other hand, you maintain a separate and distinct paper file and you have bits of notes, correspondence, etc. in that file, then again you need to evaluate your internal processes. As an independent agency, you can operate under whatever internal and external processes you deem appropriate. It is not possible to provide the advice you are seeking based upon the information provided. Just because something arrives electronically doesn’t mean it is more likely to be accurate. In fact, its chance of being wrong now means that it is IN YOUR SYSTEM WRONG and will affect mail merges, management reports, and information given verbally. While carriers make few mistakes on renewals, they certainly do make them AND items have been known to download incorrectly (e.g. into
FACULTY RESPONSE
the wrong client), and downloads often overwrite agencyneeded information or bring in carrier codes instead of plain-English field entries. Moreover, automated renewals have caused many agencies to spend more time communicating with clients who don’t pay their bills (via reminders that should not be done!) than with good clients who pay their bills and don’t cause problems. The renewal gives the agency the opportunity, if they don’t find it anywhere else, to stay in touch with the clients. Plus, rounding the account would be a nice thing to do, both from a revenue standpoint and also for E&O protection. What kind of mistakes are you checking for? Some may not be a mistake, but could create major E&O problems. Are you talking personal and/or commercial lines? These are just a few thoughts. Check to be sure the insurer has used the same edition of the coverage form. If they have not, what were the differences in coverage? You should check to be sure no “strange” endorsements have been added, or requested endorsements omitted, that limits are as requested. For Business Auto, were the requested symbol(s) used? These are common omissions.
FACULTY RESPONSE
Yes. Always. Also check for wording changes and use of new forms. It is cheaper than an E&O claim.
FACULTY RESPONSE
To read more faculty responses including an article from agency management consultant, Al Diamond., click here. Please note: You will need your IIANM log-in to view complete article. Contact rachel@iianm.org if you need yours.
Independent Insurance Agents of New Mexico - www.iianm.org - * November 2013
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