| RISK MANAGEMENT |
FITTING RISK MANAGEMENT INTO
YOUR 2020 STRATEGIC PLAN
How do you balance practicality and still focus on your growth?
by Katie Hobson
K
AIA and ASCK act on a philosophy that agency
errors and omissions (E&O) coverage is the most
critical tool to help protect your agency, assets,
and staff. It would naturally follow then that framing your
strategic plan with your agency E&O in mind is a good
practice. Here are several ways that your agency E&O can
help you in your planning process.
PROFESSIONAL SERVICES
At the top of the list is determining whether or not you have
coverage for the professional services you are currently
offering. It is typical that as agencies grow and expand,
so do the kind of services provided. Plus, a constantly
changing industry is leading to agencies becoming
more creative in the ways that they go about diversifying
income to realize organic growth. The potential issue that
arises from these kinds of scenarios is that not all policies
are created equal. It is essential to communicate your
plans for growth with your E&O administrator to identify
whether your policy will provide coverage for these new
services. Not only does this mean reviewing the covered
professional services, other services, and exclusions in your
policy form, but expanding your services may also lead to
needing to change policy forms or even carriers.
OPERATIONAL REVIEWS
Depending on where your agency is in the cycle of growth
and retention, it may be worth investing in an operational
review. Consultative services are available from several
sources and can vary widely. A small scale review could
involve a review of your marketing content. In the agency
E&O marketplace, websites have become a hot topic
because of the increased exposure they create. While
you may be very familiar with the kinds of phrases that
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can pose a threat to your agency, marketing professionals
likely do not, and believe it or not; your website content can
create issues in the event of a claim. Claims handlers and
lawyers review agency websites as part of the process for
determining the value of a claim. When representations on
your website over-state your ability to deliver a particular
product to your customer, the value of your claim can
increase because you may be increasing your legal status
from “Order Taker” to “Insurance Advisor.”
For agencies coming off of a substantial growth cycle, an
operational review is a great way to check-in with your
policies and procedures and whether they have kept up
with the changes in your agency. An operational review
intends to help you and your team identify whether there
are ways that you can learn and grow together. Practically
speaking, they do involve quite a bit of time. The review
itself can take a few days in some cases and involve some
back and forth between you and your consultant. It is best
to plan to give yourself plenty of time to make sure this
investment in your agency provides a high-quality return for
you and your staff.
LIMITS
When it comes to determining your agency E&O limits, a
great starting point is to review your largest account on
your books. What limits are they carrying? Now evaluate –
is there capacity within your current E&O limits to cover a
claim that could derive from that account?
Kansas agents have experienced some substantial claims
over the last several years, and there does not seem to be
any particular trend as to why they are occurring. However,
it is notable that the agencies who carry higher limits seem