Check your list twice.
Dr. Atul Gawande, a surgeon and author, thinks that we all should be making more lists and checking off the items as we complete them. In his recently published book, "The Checklist Manifesto: How to Get Things Right," Gawande proposes that the simple act of making a list and using it could prevent countless mistakes, or as we insurance types call them, "errors and omissions." He points to the World Health Organization's Surgical Safety Checklist, a list of 19 items that can be answered Yes, No or N/A. In the initial study using the list, inpatient deaths following major surgeries were reduced by 40 percent just by following the checklist, according to the New England Journal of Medicine (Jan. 29, 2009). So naturally, all major hospitals worldwide immediately adopted the checklist as their standard procedures by the end of 2009. Well, perhaps "naturally" they should have, but in fact only about 10 percent of American hospitals had done so a year after the study was published.
Let's pause for a moment on that 10 percent figure. The checklist is freely available from the WHO's website. Implementing the checklist costs next to nothing, a little photocopying--one extra piece of paper in the patient's chart. Using the checklist can reduce inpatient deaths by 40 percent, but only 10 percent of U.S. hospitals have adopted the procedure. How could that be? Gawande has his opinion: "[We] doctors remain a long way from actually embracing the idea. The checklist has arrived in our operating rooms mostly from the outside in and from the top down. It has come from finger-wagging health officials, who are regarded by surgeons as more or less the enemy, or from jug-eared hospital safety officers, who are about as beloved as the playground safety patrol."
For a surgeon, Gawande doesn't mince words. Professional hubris, which may explain why surgeons have not immediately and universally adopted the WHO checklist, is not unique to medicine (or to law, for that matter). Licensed professionals sometimes blanch at the thought of being told how to do their jobs. But imagine for a moment the panic that would ensue after captain Oveur gave the following welcome to passengers on Flight 209:
"Good morning, folks. This is captain Clarence Oveur, and I'm ably assisted here in the cockpit by co-pilot Roger Murdock. We're second in line for takeoff. Although we expect a smooth flight today, we recommend that you keep your seatbelts fastened whenever you are seated, even if the seatbelt sign is off, in case we hit some unforeseen turbulence, because your safety is our No. 1 mission. And in that regard, I decided to skip the pre-flight checklist today because it's my birthday, and besides I've been a licensed pilot for nearly 40 years, so what could possibly go wrong?"
We come, at last, to the point of this column: insurance professionals can reduce their own exposure to E&O risks by using checklists. Moreover, insurance professionals can help their business customers reduce their exposure to liability claims by encouraging the use of checklists that are suited to their businesses.
This column appears in the June issue, a month known to many agents and brokers as "June madness" because of the number of policies expiring on June 30. A lot of those renewals already have been taken care of, but it's coming down to the wire for the rest. Chances are that the renewals left unfinished are the hard ones, the applications that have some hair on them. It's crunch time, and when the going gets tough, the tough can get sloppy.
It also is a time when many small businesses aren't faring very well, when paying more for insurance premiums to buy expanded coverage isn't near the top of their lists of priorities. How can a conscientious insurance broker point out the need for higher limits or broader coverage at a time like this?
Enter the checklist. It is a simple, non-threatening way to bring up a lot of subjects. Higher CGL limits? Check the box for "Apply" or "Decline." A new miscellaneous E&O policy for a business that has never had one, but faces exposures for consulting liability? Just check the box. A personal umbrella for the business owner? Ditto. And like Santa, who updates his list once a year, renewal checklists should not be static, but should be constantly refined, and as new versions are written, the older ones should be discontinued.
Using a renewal checklist is one efficient way to reduce the risk of E&O claims by offering your customers ways to reduce their risks. So naturally, all agents and brokers have adopted the checklists as parts of their standard operating procedure, right? Unfortunately, just as only 10 percent of U.S. hospitals are using the Surgical Safety Checklist, renewal checklists have not been universally welcomed by the industry.
Why don't all brokerage firms use checklists? One reason may be the fear of leaving something off the list. That's a reasonable concern, but not a good reason to leave your customer exposed to a likely risk. Try a Google search for "insurance broker" and "checklist." I performed one and received 54,400 hits. There are a lot of already developed lists out there, many of them designed for use with specific types of clients or insurance coverage. While I can't endorse any particular list, here are a few that popped up:
* National Assn. of Mutual Insurance Cos. offers a checklist to its member companies and their agents: www.namic-insurance.com/news/032105.htm.
* IBA-West.com offers its members checklists for some specialized coverages, including construction contractors and builders, and coverage for wineries. IBA West members also receive discounts on CD-ROMs of insurance placement checklists prepared by the Insurance Skills Center, including commercial lines, personal lines, real property, file management, and contractors or construction.
* Some agencies post their own checklists online, and while it may be necessary to customize another broker's list to your own clientele, it isn't necessary to reinvent the wheel. Here's an example of a business insurance checklist: www.millerifs.com/quotes/checklist_business_insurance.htm.
There's another objection to checklists that I hear sometimes: "If I start using a checklist but fail to do it with one client and that client has an uncovered loss, won't that be evidence against me?" Yes, it may be, but you'll still be better off with the 99 percent of your clients with whom you did use the checklist. Going back to Gawande's example, a hospital might be in a worse position for failing to use the WHO Surgical Safety Checklist with one patient, but would still prevent many post-surgical inpatient deaths by following the procedure with all others.
I used to hear a similar argument when employment practices liability cases were still relatively new: "If I have a personnel policy manual, but fail in one instance to follow the procedures in the manual, won't that hurt me if that one instance results in a claim?" There was a lot of resistance to personnel policy manuals because employers didn't want to tie themselves to a set of uniform procedures, thinking that "every situation is different." Today, most companies of any appreciable size have personnel policy manuals, recognizing that while the outcomes in various personnel situations may be quite different, having standard, written procedures encourages fair treatment. Like checklists, there are plenty of personnel manuals online, though a specifically tailored one is a far better option.
A renewal checklist serves an additional purpose: If checklist use is a required routine in your office, the completed list becomes written confirmation of your conversation with the customer--you might even ask the customer to sign it, or send her a copy in the mail afterward. Used religiously, a checklist is a "business record" in legal terminology, a document that is presumed to be admissible in evidence and factually accurate. Used only occasionally, the form might still be admissible in evidence in other ways, but may not be given the same weight by the judge or jury. Another advantage: a business record is still evidence, even if you don't recall the conversation, or if the customer service rep in your office who had the conversation has joined the Peace Corps and moved to Ghana.
The checklist is also contemporaneous with the discussion, which can make a huge difference in credibility. Your customer, now a plaintiff after sustaining a loss that would have been covered if she had taken your recommendation about bought that Miscellaneous E&O policy, testifies under oath that the subject never came up during the 2010 renewal process. You have a lot of clients, and, being a more honest witness, you can't recall precise details of the meeting. Fortunately, your checklist remembers for you--Miscellaneous E&O? "Decline"--and since the form was completed before the loss occurred, it may have a lot more "street cred" with the jury than the self-serving and surprisingly detailed testimony that the plaintiff gave, with benefit of 20/20 hindsight and a financial motivation.
If your agency is feeling a bit "listless," start a To Do list, and put at the top of the list to use checklists to help your staff get through the June renewal season unscathed, and start July on the A-list. F&B
Louie Castoria defends brokers and other professionals, and is a humorist in his spare time. He is a partner in Wilson Elser Moskowitz Edelman & Dicker LLP in the firm's San Francisco office. The views expressed herein are the author's, and are not legal advice.
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|Title Annotation:||AVOIDING Errors & Omissions|
|Publication:||American Agent & Broker|
|Date:||Jun 1, 2010|
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