Taking a look at what’s behind the rise in E & O claims against insurance agents helps them better prevent a suit and defend themselves in the event of one.
Some estimates say that as many as one in seven insurance professionals could be named in an E&O claim during their career, while others say the probability is higher. These increased numbers in claims indicate changes in insurance industry operation and the general culture that are driving factors.
1) Rapidly changing insurance products
Insurers have an array of products to offer, and these days they’re ever-changing and growing in number. That places an increased burden on agents to stay abreast of alterations, new riders, and the like so that agents can properly communicate all options and factors to their clients. Agents must remain in a constant state of research in order to best educate those seeking insurance.
What’s the solution? Agents should routinely inventory and review insurers’ products, ask questions, and make sure they have a full understanding of what’s available. Agents should read all correspondence with insurers’ and keep up-to-date files. That’s all easier said than done in our hectic world, but the extra work goes a long way in avoiding an E&O claim.
2) Rapidly changing exposures
Just as products are ever-changing, so are exposures, both for the clients and for the agents. Although the digital age has made our jobs and lives easier in many ways, it has also opened up new areas of vulnerability for everyone. And it’s constantly evolving. Business owners and individuals seeking insurance have new and unique needs when it comes to coverage. And just like their clients, insurance agents are also experiencing new areas of exposure or vulnerability that can be attributed to technology. Documentation, communication, confidentiality and cyber exposure are areas of concern.
What’s the solution? Keep paper trails of all email and digital communication. Use caution when obtaining electronic signatures. Set up best practices for storing client information.
3) Consumer demands
The fast-paced digital age has also led to higher demands from consumers who want things done faster. Agents carry higher client loads, thanks to better marketing technologies. That means they are constantly pressed for time to complete an increased number of tasks that they are also expected to execute immediately. Those time constraints can lead to mistakes, miscommunications, errors in documentation, and more.
What’s the solution? Agents should be honest with their clients and themselves about how much time a task will take and not overpromise or overload themselves. They should take their time and use care and caution when learning about their clients’ needs, doing paperwork, communicating options, and performing additional duties.
4) Americans have grown more litigious.
The U.S. is one of the most litigious nation’s in the world. Agents should not feel personally attacked by an increased number of claims. E&O claims are on the rise in many industries, not just within the insurance field.
What’s the solution: Consistent, accurate documentation is the best defense against an E&O claim.