Most insurance agencies have a procedural manual in place in order for staff and workers to know what guidelines they need to follow during the course of performing their duties. There are those, however, that advocate doing away with the manual, citing that it is a discoverable document. For example, in the event of an errors and omissions (E&O) claim, both attorneys (the one defending as well as the one that is suing the agency) will have access to it, and can bring it into evidence during litigation.
Although there are some circumstances where a procedural manual can be a cause of concern, it can also serve as a very useful and valuable business tool. The business of selling insurance can be fraught with difficulties, which is why every smart agency has insurance agent errors and omissions insurance to protect the business and their agents.
What makes an agency a good E&O risk?
Typically, the word “consistency” is used a fair amount; consistency is how the various procedures outlined in the company manual are performed. Allowing each employee to do things in their own way is usually not a good idea and can certainly help to cause problems. Another benefit of a procedure manual is for new employees to get a grasp of how the operation works with a shorter learning curve.
Unfortunately, when the plaintiff’s attorney, in the event of litigation, is able to discover a lack of consistency or that individuals in the agency did not even follow their own procedures, this can spell trouble. From time to time, it is a good idea to review agency procedures and to compare them to what the staff may actually be doing. Invariably it may become apparent that the staff is not performing the task the way that it is stated to do so in the manual.
However, the issue isn’t always that the employee was consciously looking to vary from the stated procedures, but oftentimes the issue is that the procedure in the agency manual had been changed, and while everyone was consistently performing it correctly, the manual had never been updated to reflect the change in the procedure.
Having a staff meeting where everyone has a copy of the manual can result in creating an updated manual and having a staff that knows what the manual states. Speak to an agent about any questions or concerns about insurance agent errors and omissions insurance, and make sure that adequate coverage is always in place.