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

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

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

1. Phone conversations. The issue isn't whether agency staff are aware that phone messages need to documented in the paper file or in the agency management system; most staff are well on board on that issue. The primary issue deals with the depth of the documentation and the timeliness of when the conversation is memorialized. Is the documentation along the lines of “Spoke with Curt regarding his homeowners”? If so, this is definitely not acceptable. The documentation should be so detailed that if someone else picked up the file that they would understand the essence of the conversation. In addition, agency staff that utilize cell phones to interact with customers, carriers and others need to understand that these conversations must be documented as well.

2. Potential verbal misunderstandings. Simply documenting in the agency system what the customer told you (or thought they told you) is not enough. It could very well be at the time of a claim when it becomes apparent that there was a misunderstanding in the file. How do you resolve this? The most effective means is to document back to the customer your understanding of the conversation. This should be in writing and for many agencies that have adopted this approach, a quick email or letter is doing the job.

An example of this is:

Mr. Jones, per your request, we have deleted the physical damage coverage on your 2005 Honda. If this is contrary to your understanding, please contact the agency as soon as possible.

Maybe they really only wanted the collision to be deleted.

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

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

4. Not tracking the “what if” questions. If the discussion deals with the multitude of “what if” questions–like which dogs are insurable, what to do if a customer's child is taking a car to college, or the host of other possible scenarios–these need to be thoroughly and promptly documented, not only in the agency file but with a letter back to the customer. If you knew that the customer was documenting the conversation, would you 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 about this issue, so bring it up at virtually every staff meeting.
Conduct periodic quality control of each employee, focusing on quality and timeliness. Most of the agency management systems provide great tools for management to view the work product of the staff.
The documentation should be professional; it should not read like a social media message. While abbreviations may be in order, the agency should develop a list of acceptable abbreviations to avoid confusion.
Establish guidelines for when to enter the documentation. The greater the time between the conversation and the documentation, the greater the chance that the information is not as complete or as accurate.

Although the main aspect of this discussion dealt with documentation with your customers, it is equally important to document conversations with your carriers, wholesalers and others. Building a file that speaks to all the discussions that take place in your agency will be extremely valuable at claim time. Without documentation, it will be your word against theirs and it is hard to say who is going to win that.

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

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