What
do your files say about your clients?
by Curtis M. Pearsall, Vice President, Agents' Errors and Omissions Department
For years, you have heard speakers at loss control seminars talk about documentation and how it can impact the resolution of an E&O claim. Also, many an article has been written on the subject. It is probably fair to say that with Agents' E&O, there is no one piece of loss control advice as powerful as the art of documentation.
The most common type of E&O claim involves "failure to provide the proper coverage." For years, I have been of the opinion that agents do have conversations with their clients about the need for higher limits or a specific type of coverage but these conversations are not documented. A claim occurs and it becomes your opinion against that of your client. While that seems like even odds, trust me they are not. You are more likely to lose the case than win it.
This information is not anything you haven't heard before. However, has anyone ever provided you any advice or guidance on what should be documented? It is impossible to predict every possible situation where documentation may be an issue in a claim or the subject matter of the documentation that may impact a claim. However, there are some definite rules of thumb that should be followed. For the sake of this article, I am going to address the issue of electronic documentation, as opposed to paper. Yet in many cases, the rules are the same.
Most agency staff have a pretty good idea
on what should be documented. Typically, conversations that your staff
have with the
clients/prospects should be noted with times, dates and the essence of
the conversation. An example is: "Spoke with Mr. Jones on the additional
limits for Jones Trucking and he is undecided at this point and will get
back to me in another week or so." Ideally, it would be wise to
send Mr. Jones a letter confirming the conversation. This is definitely
the
best approach, time permitting. These types of conversations should also
be entered in a diary so they can be followed up to make sure the issue
is resolved.
In this day of electronic communication, it is likely that you will receive e-mails from your customers/prospects as well as from your companies. These should be handled the same way that you would handle a paper memo or phone call. Full documentation of the file means documentation and memos of electronic or paper format, or phone calls.
This seems fairly innocent and straight forward—documentation that is honest and objective. Is this the nature of documentation in your electronic files? A good general rule of thumb to follow is to take the position that anything that is documented in your files can be and probably will be subpoenaed in the event of an E&O claim. Using this rule of thumb, how comfortable do you feel? You may say that you have no concerns about this in your agency, but here is a true story from a phone call I received from an agency on this issue. The producer had documented in the file not to advise a particular client to buy a specific coverage because there is no way that they could afford it. If a claim occurred that would have been covered by the coverage that was not offered because the client could not afford it, this type of documentation would have been extremely damaging. Obviously the best advice in this scenario is to offer the coverage and let the client decide whether they can afford it or not.
Are you reasonably certain that your files do not contain any disparaging comments regarding your customers? Whether or not comments of this nature impact the resolution of an E&O claim is immaterial. They are not appropriate and should not be condoned.
If you are not sure what's in your files, take a look at a number of files involving each of your CSRs. If you have a procedures manual, there should be a section dedicated to this subject. If you don't have a manual, make sure that your staff knows the do's and don'ts of file documentation.