|
The Value of Consistency: Establishing
and Teaching Standard Operating Procedures
|
|
Whether you own or are involved in the management of an
insurance agency, there are two actions an agency can take to help avoid or
mitigate a claim. An agency should implement standard operating
procedures ("SOPs) for all of its employees to follow. Giving
employees a clear direction of what actions should be taken – or not taken
– in certain situations is essential. However, having SOPs in place
is not enough. An agency should properly train all of its employees
on its SOPs. Establishing SOPs and training employees on the SOPs go
hand in hand. Without proper training, SOPs can be worthless.
Some examples of claims that could have been avoided if the
agency had established SOPs and properly trained its employees include:
1. Relaxing procedures when procuring coverage for a
long-time client.
A customer of the insurance agency had developed a good
business relationship with the agency's CSR over many years. As an
investor in real estate, the client would purchase new homes. The CSR
verbally agreed to procure coverage for any new home. After the
closing, the client would contact the agency CSR to advise the agency about
the newly acquired property. Because of their longstanding business
relationship, the CSR would not require the client to complete or sign any
applications regarding coverages for each property. The CSR abruptly
left the agency and failed to procure coverage for 3 of the client's newly
acquired homes. The homes were damaged by Hurricane Irma. It
was not only until after Hurricane Irma did the client and the agency
realize that the CSR failed to procure the coverage as requested. As
a result of the uninsured losses to his homes, the client filed an E&O
lawsuit against the agency.
2. Responding to a client's text inquiry regarding insurance
coverage.
In the frenzy prior to Hurricane Irma making landfall, an
agency employee receives a text from a concerned client regarding coverages
under its insurance policy. The agency's eamployee was out of the
office, so she did not have the opportunity to look at all of the agency's
documentation to thoroughly investigate the client's inquiry. The
agency's employee wanted to alleviate the client's concerns because of the
impending storm and incorrectly advised the client that the policy would
provide coverage for wind damage to the client's home. It was only
after the client's claim was denied did the agency's employee realize she
had provided its client with erroneous coverage information.
3. Failing to have a system in place to follow up on
requested coverages.
Within a few months, the unthinkable happened to one agency:
one manager unexpectedly left and another manager became seriously ill.
The agency tried to operate as best as it could, however, the amount
of work was overwhelming and things were "missed." One
client had purchased a new vehicle and contacted the agency to add the
vehicle to his policy. The agency had submitted an Auto Policy Change
Request, but the carrier required additional information and did not accept
the Request. The agency was unable to follow up on its Request in a
timely manner due to the lack of manpower. The client's new vehicle
was involved in a loss. After the carrier denied coverage for the
loss, the client made an E&O claim against the agency.
In all of the above examples, if the agency had taken steps
to establish SOPs and properly train its employees, a claim could have
probably been avoided. It's important for an agency to remember that
it should continually consider whether its SOPs should be modified as new
situations and new exposures arise.
Kristina Miller is an Assistant Vice Presidents and Claims
Specialists with Swiss Re Corporate Solutions and work out of the Chicago
office. Insurance
products underwritten by Westport Insurance Corporation, Overland Park,
Kansas, a member of Swiss Re Corporate Solutions.
| 
