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Failing to properly document files can be costly – It cost one insurance agency $5.83 Million

Put procedures back in place before the pieces come apart

Whether it’s a claim file, an underwriting file, or in this case, an agent’s file, the lesson is the same. Proper documentation is going be more persuasive evidence that something took place. A recent example of that has just been reported in National Underwriter. A California insurance agent failed to document the absence of Workers’ Compensation coverage pursuant to state law. The agency had guidelines in place to ensure files were properly documented, but court papers indicated that they failed to follow their own procedures. This small mistake cost this agency over $5 million. Yet another example of what happens when the file fails to speak for itself.

Sometimes cliches are the best way to state the obvious: If it wasn’t in writing, it didn’t exist.

A few additional lessons learned:

  • Evaluate procedures regularly, and make sure they are effective
  • Audit and review your files for procedural compliance
  • Files should tell a story that documents what transpired
  • Even good procedures are useless if you fail to follow them

Posted in Best Practices, Commentary, SPOT on Ops.

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