Best Practices for Technology Issues and E&O

There are many issues in agency management that can impact E&O losses. In fact, the E&O landscape is constantly changing due to changes in technology, the marketplace, and the legal environment.

Technology itself does not create any additional E&O concerns that were not present in the paper world. A focus on customer service and proper documentation of files is needed regardless of the system used by the agency. Since the use of technology is designed to improve efficiency, the time saved by producers, CSRs and others in the agency can be better spent giving advice and counsel to clients.

Admissibility of Electronic Records

In the early days of agency automation, many people feared the loss of a “paper trail” in the event of an E&O claim. In reality, it is usually a lack of documentation that leads to payment of E&O claims, and that documentation is lacking in both paper and electronic files. It’s not the method that’s used that affects E&O claims, it’s the inconsistent application of the method. If electronic files are properly documented and maintained, they provide even more compelling evidence in an E&O case than a paper file, simply because the court recognizes the difficulty in altering the information. While they are considered admissible, there are procedures that must be adopted and followed as respects electronic files in an agency.

In This Section:

Best Practices Ideas For:


Automated Agency Management Systems – Upload and Download

Agents waited years to achieve upload and download capability. However, like many things in technology, these processes are not without their problems. In the most serious cases, the information received from the carrier may actually overwrite information already contained in the agency’s database. It is important that any information received from the carrier be audited to determine its validity and the method by which it entered the agency’s system.

The Best Practices for Avoiding E&O Claims When Using Automated Agency Management Systems

  • Don’t maintain two file systems—use the electronic file exclusively for documentation of all matters relating to the client and rely on that system
  • Require all agency personnel to document in the system and periodically check to see that this policy is being adhered to
  • Input information into the agency management system promptly upon receiving it
  • Information is best input by someone with personal knowledge of the transaction
  • Input must be completed by a competent person
  • Establish a procedure to verify the accuracy of all data input by the agency—this is best done by random checks that occur on a regular basis
  • Establish a procedure to verify the accuracy of all information received from insurance companies via download—this can be accomplished by reviewing the individual items contained in the download file received from each carrier (See E&O Tip #1)

Cellular Telephones and Voice Mail

Some of the advantages to living in modern time are the many ways you can remain in close touch with your clients. However, this may also create E&O exposures that should be addressed by the agency. The biggest problem is documentation when calls are made or received in remote locations and input into the system cannot be completed in “real time”. Although most agencies have a standard for return of phone calls (end of business, within 24 hours, etc.), it is difficult to monitor compliance with the standard when using cell phones or personal voice mailboxes.

The Best Practices for Avoiding E&O Claims When Using Cellular Phones and Voice Mail

  • Use your own voice mail to document conversations immediately after they take place
  • As soon as possible, input all information of telephone conversations into the system
  • Confirm in writing with the insured any requests received via voice mail
  • Update your voice mail message daily, especially when you will be out of the office for an extended period of time
  • Maintain a log of voice mail messages that includes the time, date, caller, and message
  • Include an appropriate disclaimer on the agency’s or individual’s voice mail greeting that advises customers on procedures for handling requests and claims (See E&O Tip #2)
  • Provide remote access to the agency’s management system for producers and other employees who are frequently out of the office
  • Establish a system to deal with personal voice mail boxes when people are out due to illness or vacation
  • Always provide a “human option” for people who call the agency
  • Keep the system simple—few people have the patience to wade through dozens of options when calling a place of business
  • Establish a written procedure for handling voice mail and cellular calls

Fax Machines

The use of a fax machine does not, in and of itself, create E&O exposures. However, as in every other area of agency management, procedures must be established for the proper use of fax technology. More and more agencies have the capability to receive and send faxes directly from the desktop, improving efficiency tremendously, but requiring a change in methods used to handle the fax.

The Best Practices for Avoiding E&O Claims When Using Fax Machines

  • Use caution when distributing a fax to make sure all pages are received and immediately forwarded to the right person
  • Make sure the date and time are always accurate on your fax machine since this serves as an automatic “date stamp”—many agencies fail to change the fax machine when daylight savings time begins and ends
  • NEVER fax confidential information unless you have the permission of the recipient and you have notified them when the fax is being sent
  • Be familiar with carrier requirements regarding fax signatures on applications
  • Maintain a log of incoming and outgoing fax transmissions
  • Establish a written procedure for dealing with transactions via fax

E-Mail and the Internet

Certainly one of the greatest things to enhance the efficiency and productivity of every agency is the increased use of e-mail and the Internet. Again, these technologies do not necessarily create E&O exposures. In fact, they may even serve as loss control devices. E-mail may be retained indefinitely, even after an individual user has hit the delete key. While the permanence of e-mail may be considered a benefit to the agency, it could also be a problem when records are kept that need not be maintained and are therefore discoverable in an E&O case. Other problems with e-mail are its perceived informality and the inability to retrieve it once it’s sent.

The Best Practices for Avoiding E&O Claims When Using E-mail and the Internet

  • Establish a written e-mail policy and procedure for your office and have every employee sign and acknowledge that they have read and understand it
  • Monitor compliance with the policy and take swift action for violations
  • Educate employees on the proper use of the agency’s e-mail system and constantly remind them that it is a business tool
  • Train employees on proper e-mail storage techniques, including the use of folders and attachment to client files
  • Discuss the issue of confidentiality and improper forwarding of e-mail messages
  • Use auto responders when employees will be out of the office for some period of time
  • Periodically purge e-mail files from your system
  • Establish a written policy for Internet usage in the office and periodically monitor for compliance

Interactive Web Sites

Most agencies have established a presence on the Internet. Some merely run electronic billboards that do not allow the customer to interact with the site. Others, however, are moving quickly to allow customers to access their own files, complete routine transactions, obtain quotes, and perform a number of other functions that would have been done by the agency itself in the past. As more and more of our customers become comfortable with the Internet and security issues are resolved, we will have to provide this service to at least some segment of our client population. This is a drastic change in terms of agency automation, since up to this point the system has existed to serve our internal needs and those of our company partners. Looking out into the future, our systems will exist to provide service to our customers and so we must develop procedures based on the fact that the client will have access to more and more of our internal files and records.

Agency web sites may present E&O exposures that must be managed. Don't Get Caught in the Web!, an article written by Sabrena Sally, CPCU of Westport Insurance Corp., explores some of the major E&O exposures that may arise and provides several E&O tips for mitgating those risks, as well as sample web site disclaimers.

The Best Practices for Avoiding E&O Claims When Developing and Maintaining a Web Site

  • Develop a digital strategy and determine which functions will be handled by the customer using the agency’s website
  • Recognize that the client is not licensed or authorized to represent the insurance company, so transactions must still be dealt with by internal staff
  • Include appropriate disclaimer wording on the website
  • Recognize that when the customer inputs data directly into your system, there is a record of exactly what was requested and when this was done

Transactional Filing and E-Filing

Concerns have been voiced regarding the increased use of transactional filing and document scanning and imaging. These methods of handling information are merely a different form of maintaining information and do not increase E&O exposures. Although original documents may be scanned and then shredded, the information contained on them is retained and perhaps managed in a way that is much more efficient than the paper itself. Records generally must be capable of being converted to paper upon request, but they need not be maintained in paper form or as a part of an individual client file any longer.