Insurance Technology and E & O Claims:  What’s the Connection? (Part 4 of 4)

Part 4:  Protecting Your InvestmentE& insurance form image
Kitty Ambers, CIC, CPIA, CISR
Chief Operating Officer, AVYST

Over the years, you have invested a significant amount of time, energy, blood, sweat and tears in your agency, your clients, your staff, and your technology.  Statistically, one in 3 agents will face an E & O allegation in any given year.  Set yourself up to be successful in defending an allegation that comes your way by taking steps to protect yourself.

Here are a few ideas:

  • Awareness, Education, Training
    • Insurance Industry Trade Publications, Podcasts, Newsletters
    • Regulatory Bulletins
    • Carrier Updates and Policy Changes
    • Discuss with staff and adjust procedures accordingly

The 7th habit we learn in Steven Covey’s book, The 7 Habits of Highly Effective People, reminds us that we must take the time to sharpen the saw.  He says that this is the habit that makes all of the others possible.  Tending to our Mental development is critical for expanding our awareness.  As relates to protecting our investment, as agency owners and leaders, we must devote the time to stay informed about what’s going on around us that can impact us, our families, our clients, our businesses.  This means time for reading industry publications, regulatory briefs, carrier communications – you get the idea.  We can’t be proactive if we aren’t informed.

By understanding the larger trends, we can then help improve the education and training opportunities for our teams. For example, reducing the potential for claims that arise from providing inadequate coverage or failing to offer coverage at all – is a direct result of reinforcing the need for agents to understand insurance coverages and carrier products thoroughly. A large number of E & O claims reflect a lack of knowledge on the part of the agent that leads to coverage gaps.  Policy forms change, insurance company underwriting criteria changes, exposures change.  Agents must be sure that they properly present coverage options, and with some lines of business this gets difficult given the lack of standard coverage language.   Ongoing education and training is the key.

Another important component of protecting your investment in your agency is to understand that technology is dynamic.  With the concerns over privacy and security, for example, our various technology tools and toys are being updated almost daily.  Think about your technology infrastructure – hopefully, you have a network diagram that shows everything that is in play to keep your agency connected – and be sure you have a plan for applying updates and patches in a timely fashion.  Depending on how your agency is set up, individual staff members might be responsible for this, or as with many agencies, the IT staff or a managed services provider applies updates on a regular schedule.  Whatever the case, be sure everyone understands the importance of adhering to procedures for keeping hardware and operating systems up to date.

With many of our agency systems residing “in the cloud”, our vendors are pushing out upgrades to us. Many agents are also reliant upon carrier websites for quoting, policy access, cancellation notices, etc. and when these systems can’t be accessed it causes major disruption to workflow.  Agency leaders must have a plan to stay aware of and prepare for these potential disruptions.

Some upgrades are minor and don’t involve significant changes to our operations, but other times the upgrades are substantial.  These require training, revising processes and procedures, and even downtime on occasion.  Be sure someone in the organization, or hired by the organization, is staying abreast of system upgrade schedules and the content of these releases so that appropriate action can be reviewed and implemented as needed.

There is nothing more frustrating than logging in to the management system on a Monday morning and everything looks different – and you had no idea it was coming.  Stay aware and plan ahead.

And finally, when it comes to technology, remember – it is ever-changing.  Both hardware and software become obsolete and need to be replaced or updated.  By having a technology strategy in place – that you review at least annually – you can plan and budget more effectively.  Whether it’s to systematically replace computers every three years on a rotating schedule, or a decision to implement an enterprise text messaging solution, planning ahead and budgeting both the time and the money to effectively implement new or updated equipment is critical to success and to mitigating E & O loss exposure.


Auditing of Agency Procedures and WorkflowsPhoto of several men working at a table with insurance forms
We’ve touched on this throughout our conversations today – it’s important to be monitoring agency performance regularly using daily, weekly, and monthly reports and financial statements.  Many agency leaders have access to dashboards that they view regularly to glean what’s going on with sales, retention, productivity, and profitability in real time.  These types of metrics often are geared toward measuring results.  It isn’t until we drill down – usually when something seems off – that we uncover areas that need improvement.

By implementing an annual audit process, you can hopefully mitigate your agency’s E & O exposure while improving efficiency.  The first step with implementing an audit process is to view the process as a way to improve the agency – not as some kind of punitive thing.  You might use a questionnaire and have employees spot check each other’s work, or you might hire a consultant to do an objective review.  Whichever method, the results should help guide improvements in the agency’s operations.

Some benefits of auditing include:

  • Determining whether staff members are consistently following agency procedures and workflows and meeting customer service standards – results will show where clarification, adjustment or re-training might be needed
  • Reviewing how agency technology is being used – is it performing well, are tools being used to the fullest extent possible – results will point out where there are glitches or frustrations with systems, and where there are untapped possibilities. Quite often, when a new system is implemented, we forget to circle back and review the features we didn’t adopt initially so auditing can help us advance to the next phase of technology implementation.
  • Demonstrates the agency’s level of productivity and can uncover opportunities to improve by eliminating redundant steps in processes or streamlining processes by setting things like default limits in the system to reduce redundant data entry. There are standard productivity measures that can result and then the agency can compare their results with peer groups using things like the Best Practices study.

Typically, a standard audit form or questionnaire is used in conjunction with the agency’s operations manual to review the various procedures.  I’ve known agencies who use their E & O renewal application as a basis, and reminder, for reviewing the various areas of their operation.

Areas to review include things like:

  • Procedures / Workflows for all agency transactions (NB, REN, QUO, ENDT, etc.)
  • Carrier Interface Capabilities i.e. Download
  • Report Accuracy i.e. Policy Status Reports, Cancellation Reports, Outstanding Follow-up Reports, Book of Business by Producer, etc

For an idea of how to conduct your own E & O Self Audit, you can review the approach and list of questions noted in an Insurance Journal Article entitled “How to Conduct an E & O Self Audit”.


Agency Insurance Considerations
One final tip for protecting your agency investment is to review your own insurance coverages, especially with the impact of the remote worker situation you may be experiencing.

Several coverages to consider adjusting might include:

  • Workers Compensation to address changes to your payroll or areas of operation with employees working from home
  • Cyber Liability to ensure you have coverage for any new risks created by employees who are working from home.
  • E & O – with all the changes going on, it’s a good idea to review any conditions and internal limits within your policy to be sure any new ways of operating are addressed appropriately




Visit and learn a bit about our eForms Wizard.  This software is designed help Producers have an easy-to-use digital solution for capturing client information and getting risks to market quickly and completely.  The system has all 830+ ACORD forms along with hundreds of insurance company unique supplemental applications.  Basically, you enter information in one place, and it flows to any other field in your submission where that same data is required.


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Wave Insurance Technologies, Inc. dba AVYST

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