When evaluating the cause of agents E&O claims, one of the current hotspots deals with the manner in which claims are handled at the agency level. While many agencies have a staff dedicated solely to this function, in other agencies this function is handled by an account exec/CSR as part of their duties. Bottom line, this claims handling task is resulting in a number of E&O claims. From my experience, at least 40 percent of agency E&O claims are caused by this level within the agency.
One common scenario, which probably occurs frequently within virtually every agency, involves a customer calling to advise your agency of a claim but then after discussing it with you, deciding that they do not want to file the claim. This could be because the claim is not much more than the amount of the deductible, or that the customer will lose his loss-free discount, or because of the additional premiums she will have to pay due to a claims surcharge.
Another “claims” issue involves other policies that the customer has that might provide some coverage for the specific loss. A common issue deals with a bodily injury claim when the customer has an umbrella. You reported the claim to the GL or auto carrier. Did you put the umbrella carrier on notice? While you may not believe the claim has the potential to penetrate the underlying coverage and go into the umbrella layer, these types of scenarios occur. The concern would be that if the claim adversely develops and penetrates the umbrella layer, the umbrella carrier may take a tough position if they were not advised of the claim early on. In other words, they will contend that they did not have the opportunity to conduct due diligence and investigate the matter.
So when a claim occurs, be sure to review the entire file to determine any additional policies where coverage may apply; then put those carriers on notice.