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E&O Loss Control

Agency Automation: Friend or Foe? (Part 6)


By Curtis M. Pearsall, CPIA, CPCU, AIAF

In this last of this 6 part series focusing on automation, we' ll look at protecting yourself in a "real time world." We will cover topics such as storing paper electronically, the admissibility of electronic documents, and how to document a file with electronic communication.

As you can imagine, the automation levels within agencies differ significantly. If this article doesn't address your agency' s level of automation, or if you have a question, feel free to write me at and I will respond back to you directly.

Also, when dealing with the latest in automation, finding E&O claims pertaining to this level of automation is very difficult, if not impossible - this is new ground, and claims in this area don' t exist with much frequency. Yet. However, if I cover this topic again in five years, I am sure that some claims will have surfaced and some aspects of automation will be tested in our court system. An appropriate overriding approach is to think the issue through and make an educated, informed decision. Err on the conservative side until some of these automation issues are tested.

If your agency works in essentially a paper file environment, it is advisable to print off any electronic communication/e-mails, etc. and put them in the file. After you send the message, print it off with any supporting documentation. The benefit of this is that anyone that picks up the paper file will be able to see the communication trail. If you have the ability to store the correspondence in an electronic file folder, that would provide a back-up to the paper file should that file get damaged. Also, as we have read and seen on various national fronts, even though you delete an e-mail, that does not mean that it completely gone! There are computer experts that will be able to go in and retrieve e-mails that you thought were deleted. Obviously, advising your staff on the proper use of e-mails is appropriate.

Electronic communication goes both ways so as you define your protocol for outbound communication, don' t forget about incoming communication. As with voice-mail or fax, you need to establish a guideline that advises your customers that they cannot bind, modify or delete coverage without talking live, either on the phone or in person, to an agency representative.

How admissible are these e-documents in a court of law? That varies from state to state but it is probably fair to say that the general rule of thumb is based on "presumed delivery."

 When you send a letter, you presume that it made it to its intended destination. The same is true for electronic communication. However, you do need to be on the lookout for any message that comes back that indicates that you message was not delivered due to some error such as the wrong e-mail address.

In regards to storing paper electronically, there are some issues that you need to be aware of. Some states require that while you may scan a document and store it electronically, you also need to maintain the original of that document in paper format. I suggest that you check with your insurance department or state agent association for the expectation in your state.

There needs to be a well thought out plan on storing paper electronically. What type of file structure do you have? Who has access to all the various correspondence? Do your carrier contracts address this issue?

One item that applies to all automation at a number of levels involves the issue of backing up your data, preferably off site. Your files should be copied to tape, disc, CD, etc. on a regular basis. Many experts recommend doing this every night. While this may seem like overkill, how would you feel if you lost your data due to one of the many viruses that are prevalent? These viruses have the ability to wipe your hard drive clean or damage it significantly.

Bottom line is that electronic communication is the latest method of dealing with companies, customers and vendors. It can have a tremendous marketing benefit, in keeping your customers informed and giving them the opportunity to communicate with you any time it is convenient for them. However, when using the electronic medium, be certain that everyone in your agency knows the rules and expectations. This will ensure consistency among the staff. Think and talk through the various issues to be certain that you are making well informed decisions and that you are in compliance with any regulation regarding electronic document handling.

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