Agents' Errors & Omissions Review is excerpted from The Professional Edge newsletter which is published by SAFECO Insurance Companies in conjunction with the marketing administrators for SAFECO's agents E&O program.
Protect your agency against computer viruses
At issue: The cyber world continues to amaze us. Not only does the Internet provide us with a surplus of information and convenience, but computer systems and technology continue to become more advanced every day. As computer systems and programs become more sophisticated and the number of users on the Internet increases, unfortunately so does the likelihood of catching a computer virus. Although some viruses are mere nuisances, others can be deadly to the entire contents of your hard drive.
SAFECO's commentary: One way to combat these viruses is to use a reliable anti-virus program that is active at all times and capable of screening for viruses while the user is online with the Internet. Although they are not 100% foolproof, virus checkers may be your best bet when it comes to protecting your network. There are several brands of anti-virus software. Because it is difficult to classify and compare the results of the programs available, however, there is some debate as to which program is the "best." Names of these individual programs can be found on the Internet or through a software retailer. These sources can provide information and assist you in finding the software best suited for your agency.
The cost of buying a program is generally $100 or less (obviously, prices will vary depending on location and sophistication of program). Given the possibility that a virus could infect your system and cause permanent damage to your agency's data, a good question to ask is, can you afford not to buy an anti-virus program? It could turn out to be a smart investment considering the costs involved with hiring consultants and reconstructing data that have been damaged or destroyed by an undetected virus.
In addition to anti-virus programs, there are further steps that your agency can take to help avoid viruses.
* Be careful with anything new you are installing on your computer, whether it is a diskette, a new program on disk or CD-ROM, or something off the Internet.
* When using a diskette from an outside source, always scan it for viruses.
* Allow only authorized users on your system.
* If diskettes are used at home and work, it is a good idea to install an anti-virus program on your home computer in addition to your work computer. This will prevent your documents from becoming "reinfected" should one system carry a virus.
Keep current on the latest virus definitions used by your anti-virus program to help recognize and avoid them (several anti-virus programs have a provision to keep users informed and updated regarding new virus information).
The Internet is an invaluable, convenient (and fun!) resource. Taking the right precautions and implementing systems and procedures will help ensure that it stays that way.
Disclosure of information
At issue: The applicant's driving record did not qualify him for the standard market, so he was placed with a nonstandard carrier. A few months following the policy inception date, the insured had three accidents in a two-month period. When the renewal date came, the carrier nonrenewed the policy. The carrier sent a copy of the nonrenewal notice to the agent, who notified the insured's personal counsel that the carrier elected to nonrenew the policy.
The client quickly became a plaintiff, alleging that the carrier and the agent released confidential information on his epileptic condition to the state, thus prompting an investigation. The complaint alleged that the defendants intentionally and maliciously engaged in wrongful conduct when they canceled the policy.
The agent claimed that when the application was received, he was not aware that the plaintiff had epilepsy and; in fact, there was nothing indicating this on the application. It was not standard for the agency to ask about a client's physical condition. Furthermore, the agent denied having released any information to the state.
The problem was further complicated by the wording of the plaintiff's complaint and the agent's errors and omissions policy. The complaint stated that the "defendants intentionally and maliciously engaged in wrongful conduct." The word "malicious" created a coverage problem because an exclusion on the E&O policy read: "This insurance does not apply to any claim brought about . . . by the dishonest act, fraudulent, criminal or malicious conduct of any insured." The carrier continued the investigation and defense with a reservation of rights.
Safeco's commentary: The agency eventually prevailed in this case, but it does raise the larger issue of confidentiality of information obtained through insurance applications and discussions with clients. Some questions on applications require further explanation and may cause the prospective applicant to voluntarily reveal information about his or her personal life. All information in the client's file should be considered confidential, and the information should not be given out without the written permission of the insured. *
©COPYRIGHT: The Rough Notes Magazine, 1998