reveals the difficulties in offering a defense when procedures are not followed. The litigation arose from damage sustained by a commercial enterprise where the carrier argued that the agency had not provided the necessary information for the carrier to quote coverage, despite several requests. Counsel stated the agency“ has no documentation that it sent the proper information and the agent who worked on the account left the agency several years ago on unfavorable terms. The agent’ s CSR says the agent was not detail oriented, was not good about providing information, and often made mistakes.” Defense counsel opined that it was highly likely the judge will rule that the agency failed to provide the necessary information. The agency itself had a strong culture of compliance but suffered from one agent who had not followed the standard office procedures established and who, thus, created a significant problem for the agency.
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In addition to implementing uniform procedures around the process of file documentation, the agency should also implement uniform procedures for diary and suspense systems. There should be a centralized agency management system and computers in each location should be compatible with one another. In fact, it is likely that computer systems will become a backbone for your organization as offices are spread out geographically. Additionally, it is essential that you ensure adequate security of personal information acquired from your insureds, and that you provide proper privacy training to all employees. The use of encryption and other measures to protect personal data when transmitted is important. If employees use smart phones, verify the phones are password protected.
As part of the establishment of standardized procedures, make sure the staff in each location knows the method to report an errors and omissions situation. Establish and discuss the procedure with all agents and employees. Do so regularly to prevent hesitation in reporting at the time of occurrence. Don’ t let problems linger. Delays could create coverage issues with your professional liability carrier.
Communication is a key to successfully running multiple locations. Free and open communication with all staff is very important when you have multiple locations. Neither the culture nor the compliance can happen if you neglect to focus on communication. Have weekly staff meetings by phone or webinar. Have your office personnel get together at least once or twice a year to enhance communication between people on all levels.
Communicate your vision to all managers in all locations and they in turn must commit to clearly communicating your vision to others in the off-site agencies. Regular audits and evaluations of the manager and the office are critical to making sure your vision is being carried out according to your expectations. While striving for positive energy in your organization, do not avoid discussing problem situations.
Consider learning opportunities which may present themselves from potential claims situations. Educate your employees about the situations which have created problems in one office so other office sites can avoid the same mistake.
Growth is positive when controlled but be sure that the“ right hand knows what the left hand is doing”. Consistent culture, compliance and communication throughout the agency at all locations, can be essential to preventing confusion and potential claims which may otherwise arise from acquisitions and dispersed locations.
Annette Hollingsworth has spent over 30 years in the insurance industry. While with ERC / GE Insurance Solutions / Swiss Re, Annette Hollingsworth has served in a variety of capacities ranging from claims to underwriting, legal to regulatory services and global compliance. Annette now serves in the Products unit where she supports the Insurance Agents Professional Liability underwriters in both the US and Canada. She attended Washburn University undergraduate and KU Law School. She has her JD., CPCU, CLU, and ARC designations. This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group(“ Swiss Re”) and / or its subsidiaries and / or management and / or shareholders.
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| MAY- JUNE 2016 | KANSAS INSURANCE AGENT & BROKER
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