Agency Automation: Friend or Foe? Part 3

by Curtis M. Pearsall, Vice President, Agents' Errors and Omissions Department

In this issue, we will continue our review of agency automation and its potential impact on E&O claims with a discussion of transactional filing. It is my perception that this technology is largely misunderstood by many agencies. However, this is a type of automation that has the potential to decrease your E&O exposure if handled properly.

Going back to the late 70's and early 80's, I can remember the slogan "Paper free in 83." Many people would argue that we have more paper now than then, yet agencies that have made the move to transactional filing have taken a step in the right direction.

With transactional filing, paper that would normally be included in an insured's file is now stored in a folder (in the back room) marked with the date of the transaction. To review an insured's file, you access the various transactions that have taken place through your computer system. Each of the transactions will indicate the date it was requested, handled, etc. To review the particular correspondence, you would need to go to the file for that date in the back room. This file contains all correspondence for transactions handled on that date.

With the proper training to ensure the staff understands the system and concept, morale is almost always enhanced. Think about it... would your attitude be different if you came to work and there were no files or paper on your desk? Sounds pretty good to me!
Since you can simply go into the system and get the history of the transactions you are looking for, and don't need to search through the file, you can improve your customer service. This applies to claims as well. Thus to a large extent, anyone can view anyone else's work.
I spoke with several agencies that use this system, and nearly all of them reported an increase in efficiency.
Many of the new transactional filing systems have been enhanced with built in suspense features. Remember that there is no file to put suspense items in.

The system has the capability to store various checklists that have been used to evaluate the exposure, correspondence from insurance companies and insureds, and letters from the agency. There will be more credibility to these records as the requests to the insurance company and to the insured are date generated. You cannot go in and change the date. This can be a very valuable feature in the event of an E&O claim.

On the downside, many agency employees that I spoke with said that they are reluctant to give the system a fair chance since they did not understand it. Be sure to communicate to your staff the objective of this system, provide the necessary training, and answer any questions that they have.

Also, if you or your staff takes any information on the phone, keep in mind that there is no back up of that information. There is still the potential for "misunderstandings" in phone conversations. To alleviate that, I would suggest that your agency send a confirmation letter out on any additions, deletions, or rejections of coverage to ensure a common understanding.

How long should you retain copies of correspondence in the back room? Many agencies go with a 7-year period. Check the statute of limitations when evaluating this issue.
Establish a disaster plan to protect against the temporary or permanent loss of your electronic records. In virtually every municipality around this country, there are data storage companies that provide off-site storage. With this service, you can be up and running with the same data fairly quickly if you have a problem. You should definitely back up your system daily to ensure the quality and accuracy of your records.

Transactional filing is a good way to improve efficiency and customer service in your office. The agencies that I spoke with are sold on its many benefits. If the training and implementation are handled properly, a decrease in your E&O exposure could be one of the advantages.