“There’s nothing that makes us happier when there is an E&O claim than when an agent reaches into the file and pulls out documentation,” says Sabrena Sally, senior vice president with Swiss Re, a provider of the national agency E&O program for members of the Independent Insurance Agents & Brokers of America (IIABA).

“When we underwrite an agency, we look at a variety of factors including size, loss history, types of products offered, jurisdictions, and operations. We look to see if the agency has risk management procedures in place, including file documentation, education of employees and the methodology for documentation,” she continues.

“A specific question in the application asks agencies whether they use a checklist when writing coverage for clients. The presence or lack of such a procedure is considered with the overall exposure of the agency in determining the rate we will charge.

“Virtual Risk Consultant (VRC) can help agencies reduce their exposure to E&O problems in a number of ways,” Sabrena explains. “It helps agents identify coverages available for exposures that are unique to particular industries. This can help agents avoid claims for failure to offer coverage or for misrepresentation of coverage.”

The Big “I” Virtual Risk Consultant is an online sales and service resource available exclusively to IIABA members. VRC helps agency staff understand the exposures of their customers and assists them in preparing proposals, explaining complicated coverage terms, and documenting client files.

“No matter how long you’ve been in business, you need an organized way to gather information,” notes Jack Sherrill, CPCU, CLU, an independent agent with Sherrill & Co., Savannah, Georgia. “I use VRC to produce a survey form that is industry-specific and go through that with a new account. I also use it for an explanation of coverages. Lastly, I use the coverage questionnaire to talk to clients about coverages they may not have.

“It makes the agent a better risk from the point of view of an E&O underwriter,” Jack adds. “But more important, it makes you look more professional in front of customers.”

When a client decides not to purchase a particular coverage, “I do try to get that in writing. But I’m a salesman first and enthusiastic about loss control second,” he admits, “so I’m not going to demand a signature. We’ll document the discussion by sending a follow-up e-mail confirming that the client chose not to buy. We also send periodic reminders about coverages that clients often choose not to buy, like flood coverage. We’ll send out a reminder to all our homeowners clients pointing out that floods are not covered.”

Jack served on the Loss Control Working Group of the Big “I” that approved VRC. He noted that as part of their due diligence, the group surveyed the Best Practice agencies to find out how they handled their E&O exposure. “Many had specific checklists that they used and they shared those with the group. VRC is as good if not better than everything we saw,” he points out.

“Another great feature of VRC,” Jack continues, “is the fact that it is regularly updated so that we are providing current knowledge to our clients.” The Rough Notes Company, which powers the product, regularly updates the information.

He concludes: “We wanted to offer members a tool that was comprehensive, easy-to-use, and affordable. We certainly accomplished that.”

David Hulcher, IIABA assistant vice president of agency professional liability risk management, describes himself as a cultural warrior who wants every agency to have VRC. “Risk management is about having a well-run operation. Mitigation grows out of that. VRC used well makes you a better agent and helps you avoid potential E&O exposure at the same time.

“It also helps to uncover those hidden profits that can be realized by writing additional needed coverages for existing clients,” he notes.

David points out that Swiss Re claims data for the Big “I” Professional Liability Program shows that about 40% of claims involve the agent’s failing to procure coverage and/or failing to adequately identify exposures. The risk analysis system in VRC assists producers and CSRs in avoiding these potential problems by:

• Helping them understand the exposure of businesses in more than 650 different industries, including recommended minimum coverages.

• Allowing them to create and print comprehensive questionnaires to collect the information necessary to complete ACORD applications.

• Providing them a comprehensive list of coverages with succinct definitions to enhance understanding at the point of sale.

• Offering important customer file documentation in the form of a comprehensive checklist of coverages offered, accepted, rejected or not applicable which is signed by the customer (or followed up via e-mail) and stored in the file.

Using a football analogy that hits too close to home for Indianapolis Colts fans (like most of us here at Rough Notes), David advises agents to “adopt a winning approach to business rather than playing not to lose. VRC can be a valuable offensive tool for agencies that want to run up the score against their competition.”

For general information or a limited demo visit www.iiaba.net/VRC. Should you have questions about what is included in VRC, contact Margaret Rhodes or Nancy Lynch at (877) 582-9199.