As a life insurance agent with National Agents Alliance there is a good chance that you’ve had to purchase errors and omissions (E&O) insurance, as most life insurance carriers require that you have it before you can be appointed with the carrier. Like with any insurance policy, it is something you always hope that is something that you’ll never need to use.
E&O insurance is a professional liability insurance that protects companies and individuals against claims made by clients for inadequate work or negligent actions. Errors and omissions insurance often covers both court costs and any settlements up to the amount specified on the insurance contract, according to Investopedia.com.
In order to keep yourself and your business safe in our litigious society, LifeHealthPro.com has some tips to help keep you out of the courtroom:
1. Be a consummate professional: You should always be professional, which means doing your homework and being cognizant of what you’re recommending to your clients. Attend all the training seminars you can to help keep you up-to-date with product information.
2. Do your research: Make sure all products and investment programs you offer are registered with the appropriate regulatory authority and approved by your broker-dealer, registered-investment advisor and insurance FMO.
3. Stay in your area expertise: Only recommend products you fully understand and are licensed to sell. If you refer clients to other providers, make sure you can vouch for their competence and integrity.
4. Solicit business properly: You do not want to misrepresent who you are, what you do, or what you sell. Use only materials that solicit who you are that have been approved by your insurance company and/or broker-dealer.
5. Practice full disclosure: Make sure to disclose all required information and be totally up front about your track record, business practices, and affiliated advisors and companies.
6. Do thorough fact-finding: When you meet with a client, make sure you fully and completely understand the client’s situation and document all relevant facts.
7. Link your recommendations to documented needs: Make sure to present only suitable recommendations (preferably more than one). After the prospect agrees to buy, review the reasons for buying the product and get the prospect to agree in writing.
8. Educate clients about what they bought: It is your job to ensure that your clients understand what their product covers and doesn’t cover, all its fees and expenses, and any risks and guarantees.
9. Leave a paper trail: Always document everything. You should document the outcomes of key client conversations, decisions made and coverage declined. No client interaction is irrelevant. Document every call or conversation no matter how trivial the subject matter.
10. Promptly resolve client complaints: Always do your best to resolve a client’s complaint. Find out why they are unhappy with you, and then fix it before it turns into a regulator sanction or lawsuit. In addition, if you believe a client will file a formal complaint, let your compliance department know as soon as possible.