E&O Risk Management: The Right Path

Eric Moberg

Several years ago, I wrote an article titled E&O Audits, They aren’t too Scary. The premise was that the word “audit” generally strikes fear in people’s minds. The good news was that having an E&O Audit can be quite helpful and enlightening.

Effective January 1, 2020, SwissRE/Westport has expanded the E&O Risk Management program to include an Agency Website Operational Review (5%), Implementation and Use of Coverage Checklists (5%) and Risk Management Credit (up to 10%) for the required percentage of agency staff participation in a live E&O class or webinar. To receive the Website or Checklist Credit, the agency must complete the Risk Management qualifications, so confirm you have the correct number of staff enrolled. Also, the agency can earn an additional five year 10% credit for performing an Agency Operational Efficiency Review (E&O Audit). There is a potential combined Risk Management Credit of 30%. Check with your state association representative, Kristie Weyer, for specific information as it will apply to your agency.

E&O Risk Management, Operational Reviews (E&O Audits) can be an extremely beneficial process for your agency. That old saying about “another set of eyes” is true. Many of our clients have us back, audit after audit, because they see the value in our diverse community of agencies. Our agency clients range from 2 or 3 person Main Street offices to agencies with hundreds of staff spread over many locations. We get to see almost every type of operation, industry specialists, coverage specialists and generalists. Over the past few weeks, we have audited agencies specializing in Energy, Surety, Benefits, Professional Liability and Equine insurance. We’ve worked with agencies using just about every automation system or combination of systems, including some with little or no automation. This exposure to a wide variety of agencies makes us better prepared to perform an Agency Operational Review or Website review. We learn from our clients every day. We see innovation in marketing, sales and customer service. Every aspect of operating an agency has potential variations.

Something I always find in the agencies with strong operations is tools to prevent errors and omissions. We continuously discuss the “Trinity” of E&O Risk Management: communication, documentation and consistency. Using effective tools such as New Business Worksheets, Risk Management Exposure Checklists, Renewal Questionnaires and written procedures help an agency reduce E&O Exposure. The staff should learn procedures and understand how to use the tools available to them. Remember, a finished procedures manual is most likely obsolete. Procedures/workflow manuals are living documents that need to be updated regularly, so take the time to review your procedures and workflow at least semi-annually. With a Moberg audit, your agency will receive a free policies and procedures manual valued at $250.

When COVID-19 found its way to the United States, you may have noticed your agency scrambling to update protocols. Every agency I have talked to in recent months had to make changes to their procedures and workflow while their staff was working from home. This will continue into the foreseeable future for many agencies and the companies they represent. They may be slower to respond to your submissions or renewal requests. They, too, have to deal with unexpected changes, so allow more time to get things done, begin that new business submission earlier if possible and begin your renewal process 30 days earlier.

Everyone will benefit, and it just might save your sanity. Everyone in your agency should be E&O Aware. Discuss why being E&O conscious is important at staff meetings. Share experiences you have had where a mistake led to an E&O claim, and take advantage of all the E&O Risk Management support you have from your Association, both state and national. There is a tremendous amount of information on the IIABA E&O Happens website. If we can help, please contact us. We would be happy to assist your agency with E&O Risk Management audits. Big I KY members are entitled to a membership benefit of one hour of free consulting from The Moberg Group each year.

Eric Moberg’s career in the insurance industry spans over 40 years. It has involved management and executive positions with insurance companies, vendors providing services to the insurance industry, as a successful agency owner, and currently as President/CEO of The Moberg Group, Inc. (TMG), an insurance consulting firm working with Independent Insurance Agents and Wholesale Brokers.

TMG, located in Franklin, North Carolina, with consultants strategically located throughout the US, is the leading provider of Insurance Agency Errors & Omissions loss control programs. TMG has performed well over 1,000 E&O Audits over the past 28 years. TMG is the preferred E&O Audit provider for many state associations and E&O carriers, including the Big I of KY.

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