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Your Files Can Help - or Hurt
Your Files Can Help - or Hurt
09.26.2022
Will your files help you or hurt you when it comes to
E&O? Take a look at the below claim scenario and risk management tip to
learn how you may protect yourself with regards to your files.
Claim Scenario: An agency's customer claimed the agency had
committed an error in handling his insurance and retained an attorney who
subpoenaed "any and all" of the agency's customer files for review.
The attorney's goal was to determine whether there were discrepancies in the
manner in which the agency handled their client's insurance needs. The agency
had no written procedures regarding file handling or business processing, and
no formal internal quality control or auditing program to monitor adherence to
such procedures. Without formal procedures in place the agency was unable to effectively
object to the breadth of the subpoena, resulting in over 1000 customer files
being turned over to the claimant's attorney. After reviewing and comparing
those files to the claimant's, the attorney discovered multiple inconsistencies
in file documentation including the manner in which coverages were offered,
written, and documented. As a result he was able to present a compelling case
that the agency had discriminated against and breached its duty to the client
at trial, resulting in a large adverse verdict against the agent.
Risk Management Tip: Your agency's file documentation is
often its first and best line of defense in the event of a claim. This loss
could have been avoided had the agency developed, implemented and monitored an
internal quality control (QC) program including office procedures regarding
documentation of the processing of business. QC Procedures should cover
subjects including binders and certificates of insurance, records management
and disposal, telephone, claims handling, mail and e-mail, and cash management
to name a few. Your quality control program should also include standardized
form letters and in-house forms
regularly used by the agency. Even with such procedures in place, the agency
must be able to prove that they are followed consistently by all employees and
that compliance is monitored on a regular basis.
A formal quality control program including a written office
procedure manual should be one of the cornerstones of your agency's risk
management program.
All information provided in this blog is for
informational purposes only. The sources used are presumed accurate. CalSurance
Associates, Brown & Brown Program Insurance Services, Inc. and Brown &
Brown, Inc. will not be liable for any errors, omissions, losses, injuries or
damages arising from its display or use and will not assume responsibility for
any misguided information. No guarantees are implied.
Written by
Joshua Wels
Published September 2022
