Have You Ever Audited Your Agency?

E&O Communique - A publication of the Utica National Insurance Group

by Curtis M. Pearsall, CPCU, CPIA
Special Consultant to the Utica National E&O Program

For most if not all agencies, things have been a little hectic over the last couple of years and you may not have had the time to review your shop. Well, it is definitely not too late. Actually, auditing your agency is fairly easy. Utica can provide you with the tools and probably even give you a credit for doing it. The hard part is that you must be honest in your evaluation of your agency. Without this, don’t bother, as the results will not be worth the paper they are printed on. However, if you are serious about reviewing and evaluating your agency, read on.

A good internal audit process involves two distinct approaches; one is to look at the management infrastructure to examine the existence and suitability of the policies, procedures and systems you have in place, and the second is to review the files. This measures the extent to which the staff (producers, CSRs, etc) complies with the policies, procedures and systems that you, as management, have put into place, both are equally important and meaningless without the other.

*Within the Management Infrastructure piece, a review of the following areas is appropriate:*
Business Strategy/Planning (Do you have a business plan) Marketing/Promotion (Compliance — Does it represent who you are?) Company Financial Rating/Contracts/Premium Payment Expectations Transacting Business/Placing Procedures/Client Needs Review/Proposals Client Issues/Complaint Handling Procedures Documented Office Procedures/Job Descriptions Handling Client Money/Internal Controls	Record Management (File Structure/Storage/Retention) IT Strategy/Resources (Does it support your Operational/Strategic Plans?) Disaster Planning/Recovery Financial Management and Reporting Organizational Capacity/Structure/Use of Internal Resources Outsourcing Training/Initial and Ongoing Corporate Controls/Licensing/Compliance Management Errors and Omissions Insurance

*“In the File” reviews how the staff is complying with your expectations. Items such as the following get reviewed:*
Knowledge and Capabilities of the Staff Client Engagement Determination of Client’s Needs and Advice on how to address those needs Arranging Insurance (Quotations, Application Handling, Binders, Confirmation) Certificates of Insurance Handling of Renewals (Pre and Post Review)	Review of company — Issued Policies for Accuracy Non-renewals and Cancellations Premium Financing/Premium Refund Claims (Knowledge/Settlement/Denial/Record Keeping) Licensing Communications (Verbal, Written, Website, E-mail, Voicemail, Record Keeping)

This is going to require that you and your staff be totally honest. That may not be as easy as you think. You need to let the staff know that you can’t fix something if you didn’t know that it needs fixing. Reward their honesty because even if you “fail," that’s okay. It is okay provided that you address those areas of deficiency and develop an action plan to turn them into strengths. Your audit is like a report card. It is a score that will help you measure progress.

Running an agency is hard work and there is a lot to think about. By going through a systematic approach, you can feel that you have addressed all of the pertinent areas and know what areas to work on. It will be a road worth traveling.

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