"This week we met with both our phone vendor and our management information system vendor to discuss our ability to record incoming and outgoing telephone conversations and being able to save the conversations in our computer system. Our phone system can do this and our computer server has the capacity to handle the additional data. Currently, all voice messages are captured on our telephones and in our computer. Most voice messages get deleted after we listen to the voice message unless there is some material information on the voice message. It is my understanding that with telephone conversations we will not be able to delete them once they get into our computer system.
 
"I believe recording of phone conversations will be a good thing relative to our E&O. It will be better than relying on handwritten notes and will certainly be able to clearly determine what was or was not said, good or bad. I would like know whether you have other insureds that are doing this. Is this something E&O insurers encourage their insureds to do? Has this helped or hurt agents in E&O situations?
 
"I would also like to know if you are aware whether we are obligated to advise the caller we are recording the conversation in Wisconsin. Our telephone vendor says we are not obligated to notify the caller they are being recorded. With our new phone system, each employee has their own direct line. When a call goes to a direct line we do not have any recording indicating the call may be recorded for quality control purposes before our employee begins the conversation."

We ran this by the VU faculty and some E&O gurus. Below are their responses, collectively referred to as "Faculty Response" in each instance. This is an emerging issue so we don't have any definitive recommendations, just some preliminary thoughts. We suggest seeking competent legal counsel.

I'm quite sure they need a disclaimer about the recording but in general I feel having the voice documentation saved is so much better than written documentation if an E&O claim were to come up with a client.

There are several angles to approach the issue of retaining conversations and voice mails with customers. I believe the first question is if there is a legal obligation to provide the customer with notification that the call is being recorded. I’m not sure if there is a legal requirement but based on the number of times you hear “this call may be recorded for quality assurance,” it is certainly a common practice if not a legal requirement.

The key to preventing E&O claims is follow-through and doing what you say you are going to do to meet your customers needs. Sound agency procedures with appropriate follow-up and verification procedures are key along with good documentation. Documentation is the most important item in being able to successfully defend a claim. With that said, a recording of customer conversations and voice mails can be a double-edged sword that could help or hurt an agency’s claim.

If an agency procures the coverage requested by the customer, offers additional coverage options, provides increased limits, etc. and it is documented via an voice electronic system then great. But, what if the agency does not and a claim occurs and those voice files are subpoenaed and clearly show that the customer requested something that was not delivered? The “he said, she said” claims will be settled more definitely and let’s hope the agency is on the right side. I think retaining customer conversations could prove helpful but only as a supplement to written documentation and follow-up with the customer. 

At this point we do not have any specific E&O procedures for implementing a voice recording system. The next generation E&O seminar material which are already thinking about will explore technology related issues such as this one so we can better provide risk management guidance for the way today’s agents do business.

I Googled this though I can’t attest to its accuracy:

Wisconsin

Wisconsin is currently a one-party state though recent attempts in the legislature there have attempted, unsuccessfully so far, to change it to two-party. Even so, any evidence gathered by a one-party consensual recording is inadmissible except in murder or drug cases, as they say.

The Wisconsin Stats 885.365 Recorded telephone conversation (1) states "Evidence obtained as the result of the use of voice recording equipment for recording of telephone conversations, by way of interception of a communication or in any other number, shall be totally inadmissible in the court of this state in civil actions, except as provided by 968.28 to 968.37." Exceptions are it the party is informed before the recording is informed at the time that the conversation is being recorded and that any evidence thereby obtained may be used in a court of law or such recording is made through a recorder connector proved by the telecommunications utility as defined in WI Stats 968.28 - 968.37 (which is the stat for court ordered wiretaps) which automatically produces a distinctive recorder tone that is repeated at intervals of approximately 15 seconds. Fire department or law enforcement agencies are exempt as are court ordered wire tapes.

Also a recording on the phone made from a out of state call or made to an out of state party, has to have the party informed of the recording and his consent or the tone on line, every 15 seconds, or a consent in writing before the recording is started.

Needless to say this does not allow a person not a party to the conversation to record any part of the conversation without the parties to the conversation being informed the third party is recording the conversation.

http://www.callcorder.com/phone-recording-law-america.aspx 

Aside from the legality issue, if my agent was permanently recording my phone calls without my knowledge or option to opt out, I would not be happy at all. I suspect that unhappy customers that feel aggrieved are more likely to sue.

As for the E&O perspective, as you say, the recording could either be a lifeline that saves the agency from drowning in an E&O claim or could be used to form a noose and hang them. I’d have a concern about overreliance on an audio confirmation instead of a written one in so far as the former might make it less likely that the agency staff member would actually follow up on a request as opposed to having something written and in the agency management system to prompt them.

I will weigh in based on my general understanding, without the benefit of special research. It is my general understanding that there are a number of states where it is illegal to have a call recorded without prior notice, permission to record it, and/or or a regular signal on the call to indicate recording. If it is not known where someone is calling from when a call is placed or where they are when a call is received (such as if generated by or made to someone using a cell phone), there is no way to know what state law is applicable as the laws of state where the call is made and where it is received can apply, and may differ. Thus, to avoid having to sort through and remain current on possibly changing state laws on this issue, risk failing to comply with applicable laws, and uncertainty around which state law applies, it has become common practice for businesses that record calls to notify callers that a call may be recorded.

Penalties for violating these laws can be quite significant; I have not researched this for quite a while but recall that in some states there used to be criminal penalties for violations. It also is unpredictable if and where any E&O or other claims may be made, and again, state laws may differ on the admissibility and/or weight of recorded calls as evidence, so it would seem prudent to maintain appropriate records in the ordinary course of business distinct from whatever practices are adopted relative to recording calls.  I hope my comments are helpful but let me know if you need any clarifications.

I'm not aware of agents recording conversations at this point, but I will check further into it. If an agency adopts this practice with all the precautions that have been mentioned, will all the conversations involving principals and producers on cell phones in the field also be recorded? If not, the agency would not have a consistent approach which is such an important principle for agency E&O risk management. 
 
In addition, even if the agency records telephone conversations, it will be important for the agency to continue to document the phone conversation in the agency management system so there is a consistent formal record of all client conversations and this also applies to agency principal and producer cell phone calls in the field. (It will also enable the agency to pinpoint the phone call if saved.)
 
Text messages and emails also need to be documented in the agency management system just as phone conversations are so all client communications are together. I believe agents are starting to convert text messages into email and attaching them to their agency management systems as they are attaching emails.

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