A Two-Pronged Approach
This guide focuses on both sides of the E&O equation: management philosophy and operational excellence.
As is the case with most things in the independent agency, owners and managers set the tone for Errors and Omissions activities.
When agency leadership demonstrates an ongoing commitment to E&O loss prevention, employees will be similarly committed to making the necessary changes that will bring about a reduction in both the number of claims and their impact. For this reason, it is important that owners and agency principals create a culture that supports efforts to reduce E&O exposures.
When it comes to management philosophy concerning E&O claims, a laissez-faire attitude toward E&O exposures is not acceptable. Conscientious as most agencies and their personnel are, E&O exposures are always lurking in the customer files of the independent agency and a primary goal of management must be to seek out those exposures that are currently latent, and ensure that they do not become a problem in the future.
Further, changes must be made in the way the agency operates to see that the same types of situations do not arise in the future. The fact that the agency has never experienced an E&O claim must not lull management into a false sense of security. One doesn’t have to actually jump off the top of the Empire State Building to know that the landing would probably be an abrupt one.
When it comes to the operational side of things, it is the agency support staff that exercises a great deal of control.
Agency procedures are often not documented, nor adhered to by all agency personnel. E&O training is often provided to only a few individuals within the agency, although virtually everyone at every level of the organization has an impact on E&O exposures. Once complete support of top management has been received, it is important to attack from an operational perspective. This means changing the way work gets done in the agency to see that E&O exposures are minimized.
The best defense against an E&O action is consistency, yet it seems that very little of what is done in the agency reflects the true “agency way” of doing business.
Errors and omissions awareness should be a topic of discussion at all regularly held agency staff meetings and the entire support staff needs to be involved in developing and implementing sound E&O loss control strategies.