For years, E&O seminars have focused on the issue ofdocumentation. This is primarily due to the premise that thequality and depth of file documentation is a major factor indetermining which direction an E&O claim goes. Soliddocumentation can literally stop a potential claim in its trackswhile poor documentation may hurt your agency defense more than youcan imagine.

Most agencies have an expectation for documentation. Is thisexpectation actually documented and thoroughly known by all staff?It should be if you truly want to instill in your agency theimportance of documentation.

Some of the areas where agencies can fall down on criticaldocumentation include:

1. Phone conversations. The issue isn't whetheragency staff are aware that phone messages need to documented inthe paper file or in the agency management system; most staff arewell on board on that issue. The primary issue deals with the depthof the documentation and the timeliness of when the conversation ismemorialized. Is the documentation along the lines of “Spoke withCurt regarding his homeowners”? If so, this is definitely notacceptable. The documentation should be so detailed that if someoneelse picked up the file that they would understand the essence ofthe conversation. In addition, agency staff that utilize cellphones to interact with customers, carriers and others need tounderstand that these conversations must be documented as well.

2. Potential verbal misunderstandings. Simply documenting in the agency system what thecustomer told you (or thought they told you) is not enough. Itcould very well be at the time of a claim when it becomes apparentthat there was a misunderstanding in the file. How do you resolvethis? The most effective means is to document back to the customeryour understanding of the conversation. This should be in writingand for many agencies that have adopted this approach, a quickemail or letter is doing the job.

An example of this is:

Mr. Jones, per your request, we have deleted the physicaldamage coverage on your 2005 Honda. If this is contrary to yourunderstanding, please contact the agency as soon aspossible.

Maybe they really only wantedthe collision to be deleted.

This puts the responsibility on the customer to advise you ifwhat you heard is not what they requested. The goal is to identifyany misunderstanding before the claim occurs, not after it.

3. Failure to offer and document options.Virtually every day, agency staff interact with customers on keyinsurance issues. The issues are plentiful and varied. Just as youprovide proposals for your customers, be sure to provide optionsfor them to consider as well. Don't just offer a proposal for a $1million umbrella; provide options for greater limits as well. Thislets the customer know that higher limits are available and thatyou not “recommending” a specific limit. In addition, requestingtheir signoff on the options they don't want to pursue is extremelyvaluable and highly recommended.

4. Not tracking the “what if” questions. If thediscussion deals with the multitude of “what if” questions–likewhich dogs are insurable, what to do if a customer's child istaking a car to college, or the host of other possiblescenarios–these need to be thoroughly and promptly documented, notonly in the agency file but with a letter back to the customer. Ifyou knew that the customer was documenting the conversation, wouldyou approach it any differently? Good, because they probably are.

To ensure that the staff knows the importance of documentation,there are a couple of approaches to consider:

• Your staff needs to know that you are extremely serious aboutthis issue, so bring it up at virtually every staff meeting.
• Conduct periodic quality control of each employee, focusing onquality and timeliness. Most of the agency management systemsprovide great tools for management to view the work product of thestaff.
• The documentation should be professional; it should not readlike a social media message. While abbreviations may be in order,the agency should develop a list of acceptable abbreviations toavoid confusion.
• Establish guidelines for when to enter the documentation. Thegreater the time between the conversation and the documentation,the greater the chance that the information is not as complete oras accurate.

Although the main aspect of this discussion dealt withdocumentation with your customers, it is equally important todocument conversations with your carriers, wholesalers and others.Building a file that speaks to all the discussions that take placein your agency will be extremely valuable at claim time. Withoutdocumentation, it will be your word against theirs and it is hardto say who is going to win that.

While quality and timely documentation may not prevent you froman E&O claim, there is nothing as important that will determinethe direction that the claim goes more than documentation. Become afanatic about it; you'll be glad you did.