An archive of learning compiled by specialists drawing on real cases is an invaluable source of knowledge that can help to avoid costly and time consuming mistakes. We explain such a scheme
CPD is not only learning about technical and regulatory matters to expand one's knowledge and understanding, but also understanding some of the processes involved in devising a training and competence scheme that will improve your business in a compliant manner.
One of the key aspects of operating an efficient business is the ability to avoid making mistakes on the job, which these days are often going to lead to allegations of negligence or a time consuming investigation and a trip to the ombudsman's office. After all, not getting it wrong is what competence is all about.
One of the problems is that the majority of practitioners experience only a handful of serious mistakes in a working lifetime (fortunately). To avoid such errors, specialist experience can be useful.
Expert witnesses, such as RW Associates, organisations representing claims settlement specialists, such as The Society of Claims Technicians, or case law text books, such as CII course books, are all sources of real cases that can be used as examples and learning exercises for developing staff knowledge and understanding.
But there is another route which, although it only scratches the surface of experience, is invaluable in the process of reducing the risk of a mistake that could prove costly.
This week's CPD is an exercise in how to create a cheap and effective case study from your own experiences and those of your colleagues.
Write down the circumstances of something that has gone wrong in your insurance career. Generally it will involve a claim being rejected by an insurer or reduced for some reason related to contract conditions, for example the application of average.
The key background facts
My firm specialised in insuring garden centres and several years into the relationship with us, as part of the business, one of our clients began grinding up bark for wood chips to sell to the public for spreading on paths and around shrubs. A sub-contractor was using the machine one day and lost a finger due to a fault in the machinery.
What went wrong
On the proposal, the business was described as retail and wholesale. We did not advise the insurer at renewal that the client had begun this process. The insurer maintained that the process of creating the wood chips from bark was a manufacturing process and, as such, there was non-disclosure of a material fact and declined the claim.
Both insurer and ourselves as broker were sued, despite the insurer having contested the fact that it was a manufacturing process, and the broker for negligence in not advising that this might be a manufacturing process and a material fact. After two years of litigation an out of court settlement was made, part paid by the insurer and part by our professional indemnity (PI) insurer. The customer lost about 50% of what was being claimed.
The commercial effect on our business
Our PI premiums were loaded at next renewal, we lost a lot of time and money supporting solicitors in defending the action. Worst of all, our reputation among our bank of garden centre customers was damaged by virtue of coverage in the gardening trade press. Customers began seeking alternative quotes from competing brokers at renewal, which they might not have done but for this case.
The learning point
When completing a fact-find or proposal it is vital to describe the trade of a business in detail and to ensure that any changes in that description are notified to underwriters as soon as possible in writing (or telephoned and confirmed in writing).
Having committed this to the assessment and learning material in a master training file held by the training officer and supervisors, split the case study into two sections.
You have, in effect, created a written record of good quality assessment material (the circumstances of the case and the questions). Whether or not you ask the member of staff for a written or verbal response to the questions, you will have provided a valuable learning opportunity.
You also have a record that can be stored on that individual's training file and used as a training needs analysis and towards competence assessment.
The point is that this is not just a straight assessment of knowledge (what are the rules about disclosure?), but a further opportunity for an individual to show understanding by explaining the effect of not applying knowledge in the correct manner.
Now the crunch point. Most quality practitioners learn through the passing down of these examples in day to day work. So what is new? The answer is that no one has ever recorded the fact that this happens daily. There is no central record of these case studies that can be used throughout your firm. From a regulatory point of view, if it is not recorded it didn't happen.
And remember that the process of compiling such case studies and experiences is a training and learning exercise for those sharing their experience and a valuable one to be recorded on their own training files.
This week's CPD exercise is for the reader to compile a case study with four questions and at least one learning point. Give the case study to a colleague and just spend five minutes with him. Make sure that you can tell the colleague where he can read about the answer.
A shoe manufacturer buys leather from Argentina. There is a standard condition of average on its fire policy.
a) What could go wrong?
b) How could you amend the policy to reduce the risk?
c) What is the learning point?
How to use CPD
This free Insurance Times reader service is intended to help you improve your skills and understanding from the comfort of your office or home. All you have to do is read the text and answer the multiple-choice questions. The answers will appear in next week's issue.
Why CPD is important
The Financial Services National Training Organisation (FSNTO)'s mission is to improve the quality and skills of the workforce as a fundamental requirement for the sustainable competitiveness of the industry. We fully support the practice of continuing professional development (CPD) as a major contributor to achieving this aim. Many people across the sector are required to undertake CPD by virtue of the work they do or the professional body to which they belong, but everyone can benefit from continuing to develop their knowledge and skills.
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