By: Mallory Cornell | IIAW Vice President & Director of Risk Management

Do you ever wonder what types of errors are most often the cause of E&O claims? Does high occurrence also mean high costs? In a recent review of E&O claim data from our partners at Swiss Re Corporate Solutions, it was found that Wisconsin insurance agents incur the highest claim costs from failing to recommend coverage, but that’s not the most common type of error in the state. In fact, only about 7% of Wisconsin E&O claims arose from failing to recommend coverage.

The data shown in the tables is provided by Swiss Re Corporate Solutions and captures claim information from January 2015 - December 2019.

While we can only speculate specific reasons for why certain error and omission allegations are more prevalent in Wisconsin than nationally, we can learn from this information and use it to improve agency operations and employee E&O awareness.

For   example,   if   28%   of   E&O   claims   in   Wisconsin   are   due   to   failing   to   procure coverage   then   agencies   should   have   a   heightened   awareness   around   agency workflows to review applications and policy information. Failing to procure coverage is often the result of missing one of more aspects of the insureds request. It might be an additional vehicle or adding an endorsement for requested coverage. As the data shows, these types of errors can also be costly accounting for about 22% of incurred claim costs.

The team at the IIAW provides continuing education, valuable storytelling, and increased E&O awareness for member agencies. In Wisconsin, we are legally required to procure coverage requested or inform the customer if coverage cannot be obtained (also known as “order taker” status). However, almost every agency has a requirement to do more than this because of the special circumstances that exist in the relationship with a customer. A special relationship is easier than ever to argue in court. With social media and websites stating services, qualifications, and promising coverage reviews, you likely have a higher duty to your customer than what you might expect. This is not always a negative, but everyone in the agency needs to be delivering the same level of customer service for each insurance transaction. Do what you say and say what you do. Seems simple enough, but oftentimes our statements and promises can get away from us.

So, what can the IIAW do to help? Our commitment to offering services for agency exposures is ongoing. As your E&O insurance provider and dedicated team of agency risk management professionals, we offer E&O Risk Management classes, Agency Operational Improvement Reviews and one-on-one support to review agency workflows and customer experiences.

Protecting your future and your agency from a costly E&O claim is important to us. You are always invited to reach out to any IIAW team member with questions about agency operations or E&O risk mitigation services through the Association.