BIG I RISK MANAGEMENT MODULES Presented By James

BIG “I” RISK MANAGEMENT MODULES Presented By: James C. Keidel, Esq. Christopher B. Weldon, Esq. Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

Who We Are: Keidel, Weldon & Cunningham, LLP James C. Keidel, Esq. jkeidel@kwcllp. com Cell: (203) 470 -9921 Christopher B. Weldon, Esq. cweldon@kwcllp. com Cell: (203) 984 -5394 URL: www. kwcllp. com Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

Keidel, Weldon & Cunningham, LLP 925 Westchester Avenue. White Plains, NY 10604 (914) 948 -7000 Fax (914) 948 -7010 303 Jefferson Blvd. Warwick, RI 02888 (401) 773 -7730 190 Old Ridgefield Road Wilton, CT 06897 (203) 869 -2200 120 West 45 th Street New York, NY 10017 (212) 753 -1000 167 Broadway Bayonne, NJ 07002 (201) 490 -7706 4625 Onondaga Blvd. Syracuse, NY 13219 (315) 425 -1100 400 Greenwood Avenue Wyncote, PA 19059 (215) 821 -1172 URL: www. kwcllp. com Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

E&O RISK MANAGEMENT: MEETING THE CHALLENGE OF CHANGE Risk Analysis Questionnaires and Coverage Checklists Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

INTRODUCTION • In the past risk assessment questionnaires and coverage checklists were viewed as a learning tools for new employees • Today, they play an important role in providing another layer of defense for an agency against some of the more common E&O allegations • Risk assessment questionnaires also provide the added benefits of providing better customer service and helping to sell more insurance Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

INTRODUCTION • Insurance agents may be expected to uncover the loss exposures for a diverse customer base which can be very difficult • This coupled with the complexities of insurance coverages can increase the ever present chance of forgetting to ask about an exposure or failing to uncover an unusual or unique activity That is why we never leave home without our checklists! Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

BENEFITS OF RISK ASSESSMENT QUESTIONNAIRES & CHECKLISTS • Reduce exposure to both knowledge and procedural-based E&O claims • Providing some vital documentation – a valuable defense tool • Making it easier for producers to identify customer risk exposures and to fill gaps in coverage • Facilitating an increase in agency premium production through cross selling opportunities, uncovering hidden profits • Providing a clearer picture of customer needs and understanding of their business, increasing customer perception of professionalism Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

E&O CLAIMS DRIVER • The leading driver of E&O claims is “failure to procure coverage”. • These type of claims primarily result from one of the below issues: 1. A lack of coverage knowledge or improper guidance regarding coverage 2. Procedural failures – generated from a lack of timely action or followup, including not properly documenting the customer file with rejection of optional offered. Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

E&O CLAIMS DRIVER • The more often a comprehensive coverage checklist can be used the better position they will be in to offer a solid defense • When presenting quotes and proposals it is recommended that additional coverage options be included beyond those requested • The continual use of checklists allows the agency to document an on-going process of offering coverage options Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

WHAT’S INCLUDED IN COVERAGE CHECKLISTS • Enhances exposure identification through a review of the coverages listed • Usually have areas indicating: – no exposure exists – recommended and accepted, and – recommended and rejected • Most provide an area for the client to initial coverages that are rejected and for a signature at the bottom of the checklist. The form should also be dated. Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

RECOMMENDED PRACTICES • The standard of care an agency must meet is largely determined by the state in which it is doing business • Every agent should be familiar with the standard of care for each state in which they sell insurance • However, an agency’s use of risk assessment questionnaires and checklist does not establish a higher standard of care. • Use of coverage checklists is a best practice that should consistently be followed Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

DEVELOPING CUSTOMIZED COVERAGE CHECKLISTS • Coverage checklists should be thorough, current, and standardized but customized for your agency. • It can be challenging for an agency to develop and update a comprehensive checklist. • Using commercially available checklists means that agency staff is less likely to modify the checklist. • Some checklists are contained with in the standardized application forms. Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

CONSISTENCY – USING THE SAME E&O COVERAGE CHECKLIST • From an E&O standpoint, agency procedures must be consistently followed throughout the agency • Along with all agency staff using the same checklist for customers, the agency’s procedure manual should outline when the checklist must be used and the procedure for using the checklist Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

ESTABLISHING A CRITERIA FOR USING COVERAGE CHECKLISTS Agencies should establish a written procedure outlining: • when checklists should be used • what checklists should be used, and • how documentation is to be completed and maintained An agency should establish the procedure based on sound risk management identification of those accounts that may require continual updating Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

RENEWAL BUSINESS - REALLY! • Using checklist at renewal may not currently be part of your renewal procedures; however, consideration should be given to the use of checklist for renewals • Claims are frequently generated from accounts that are renewed “as is”. The “as is” concept may be narrowly interpreted as only applying to a renewal policy that duplicates the previous policy information • Checklists provide a more thorough review of the insured’s current needs • Checklists used on renewal may help an insured identify an exposure the did not think about insuring • In certain lines of business, the agency should consider sending a renewal checklists to customer at renewal Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)

WHEN COVERAGE CHECKLISTS AREN’T USED • The agency should have a procedure in place to offer the availability of a more comprehensive exposures analysis at the request of the customers and may require the agency to be licensed to act as an insurance consultant. • A letter indicating that coverage has been placed as requested could include an offer to complete a risk analysis checklist if the customer is interested. • The importance and benefits of this more thorough checklist risk analysis can be stressed to the customer. • Maintaining the letter in the customer file will serve as documentation of the offer. Copyright © 2012, Big I Advantage®, Inc. , and Swiss Re Corporate Solutions. All rights reserved. (Ed. 08/12 -1)