By Richard Lund, J.D., Vice President, Senior Underwriter, Swiss Re Corporate Solutions*
You've heard that phrase over and over, and while it may be a cliché, it doesn't make it any less true. And it can be especially true when you are trying to do everything you can to prevent an E&O claim. While you've heard from many sources that one of the best ways to prevent an E&O claim is to have proper documentation, did you know that the carriers for whom you write insurance business also provide you with the offense to help you prevent an E&O claim? Have you considered utilizing the insurance companies' expertise to help inform your customers of ways that they can prevent having a loss, and by so doing, provide you with a potential defense to an E&O claim?
Much like the E&O Happens website (http://rms.iiaba.net/Content/default.aspx) provided by Swiss Re Corporate Solutions and the IIABA provides risk management and claims prevention tools for you as insurance agents, many of the companies that you write with have pages on their websites devoted to helping their customers prevent claims. For example, on the Travelers Insurance Company website, www.travelers.com, is a tab at the top of their home page that says "Prepare & Prevent". By simply clicking on that tab, a list of over 30 areas are revealed for individuals, business, weather, and even seasonal exposures that provide tips on how to prevent losses. For individuals, a quick review of just a few of them provides tips on how to prevent losses from proper use of fire extinguisher, to winter home maintenance tips, to how to protect yourself from package theft and ID fraud. For businesses there are tips on cyber risk, how to adjust a desk chair and work station, and business continuity plans. And there are many more.
Companies, such as Nationwide, The Hartford, CNA, Philadelphia, EMC, and many others, that are partners with your state IIABA insurance association have similar website pages that help their customers with similar information about how to prevent losses.
So how do those websites help you provide a good offense to defense of an E&O claim? By informing your customers of the availability of these resources on how they can take steps to prevent claim, they will provide you with the ability to defend against an E&O claim against you without them being aware they are doing so.
For example, let's say you have a customer who has a homeowner's policy, and the carrier you have placed them with has these resources available. As part of your normal good customer service you let them know that the carrier has these resources and you direct them to the website and recommend that they take a look to see what they might do to help them prevent having a loss. One page of that website has a section on how to prevent water damage. Let's assume this is a young new homeowner that may not be aware of all things they should be doing to prevent having water damage to their home. The website will contain information on how to protect water pipes from freezing, the benefits to keeping your gutters cleaned and how to landscape in a way that diverts water away from your home.
It walks the customer through common situations that the customer may experience and then gives hints on how to prevent losses. Just as we recommend that insurance agents use a checklist to make sure they are offering the right coverages to their customers, these prevention tips are checklists for preventing losses by your customers. By following these steps your customer is taking steps that will prevent them from having an uncovered loss that might later try to blame you for. Therefore, the best way to prevent an E&O claim against you as an agent is to stop the claim from ever happening in the first place. In other words, the best defense is a good offense.
This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group ("Swiss Re") and/or its subsidiaries and/or management and/or shareholders.
*Richard F. Lund, JD, is a Vice President and Senior Underwriter of Swiss Re Corporate Solutions, underwriting insurance agents errors and omissions coverage. He has also been an insurance agents E&O claims counsel and has written and presented numerous E&O risk management/ loss control seminars, mock trials and articles nationwide since 1992.
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