As an insurance broker, most of your duties are centered around developing risk management strategies and solutions for the individual needs of your clients. Given that you’re also responsible for monitoring insurance coverage while providing guidance to protect their financial health, this puts you in a precarious position of risk.
As a result, brokers should be aware of the following six most common causes of errors and omissions claims against insurance agents.
1) Not maintaining correct coverage
Despite your best intentions, you might not always get the right coverage as business or market needs change. Unfortunately, should a loss happen during this time, your client would be responsible for financial damages. In turn, your client may seek legal action should they feel like you’re at fault.
2) Poor explanation of coverage
Even if you’ve maintained appropriate coverage for your clients, there are three areas that could trigger an E&O claim if you haven’t explained their coverage correctly. The first risk is that your clients need to understand the terms and coverage limits before they purchase a policy. You also need to ensure that you communicate any premium due or changes in policy terms when it’s up for renewal. Lastly, your marketing materials need to be regularly reviewed and updated to ensure they appropriately depict the policies you offer.
3) Client management errors
Mistakes are an unfortunate part of life. In the workplace, this can come about when using different software programs for new policies, maintenance and renewals. Additionally, if you’re fortunate enough to work with a support team, beware that communication errors can arise the more people there are involved in the flow of information about a client.
4) Poor risk analysis
Conducting a thorough risk analysis is crucial to determining appropriate coverage for your clients. Understandably, failure to do so can possibly come at the cost of an E&O lawsuit. However, this risk can be mitigated by regularly testing your risk analysis skills and staying committed to enhancing your education.
5) Failure to share a change in policy coverage
Changes in policy coverage can happen for a variety of reasons. From notice of renewal to capacity issues from the insurer and more, it’s your responsibility to properly inform your clients of such changes.
6) Inaccurate client information was sent to an insurer
Before coverage can be finalized, there are three essential funnels for information. Whether it’s from agent to client, client to agent, or agent to the insurer, it’s important that you set up a process to ensure accurate information is being presented at all times. These actions should include monitoring claim activity, monitoring your carriers’ loss ratios, and communicating every claim to the insurer.
While you’re busy taking care of your clients’ needs, let us take care of yours. Backed by a team of industry professionals, contact the Axis Insurance Group for more information or to discuss solutions for your unique needs.