How E&O Exposure Is Built In Long Before the Claim

• November 11, 2026

By Kathryn Lerch

Every agency has a file it would rather not be judged by. That file is rarely the work of a careless account manager, but rather a good employee on a busy afternoon two years ago, handling an account nobody had any reason to flag.

When a claim surfaces on that account, the question is no longer whether the work was done well but what the client file can show. By then, the account manager may have moved to another firm, and the producer barely remembers the client and the conversation in dispute.

The outcome of the agency errors & omissions claim traces back to decisions made years earlier about how the work gets recorded, when nobody was thinking about claims.

Errors & omissions is usually discussed as a matter of judgment, with agencies putting real effort into training people to ask the right questions and confirm decisions in writing. But what survives after the work is finished? Documentation holds up when the workflow produced it, but falls apart when it depends on someone to go back afterward and write down what happened.

After spending years working inside agencies and leading operations through acquisitions and system implementations, I have seen this pattern repeat itself many times. A common version of it starts with an account manager reviewing a renewal with a commercial client and recommending higher limits. The client declines due to the cost. The account manager intends to note the conversation … but the phone rings, three certificate requests come in, and the renewal has to go out that afternoon.

Two years later, that declined recommendation becomes the entire question. If the conversation was captured in the agency management system (AMS) while the agency processed the renewal, the agency has an answer. If it lives in an email the account manager sent to themselves, or in a personal note, or nowhere at all, the agency is relying on memory.

The difference between those two outcomes has little to do with how careful the account manager was. What separates them is whether the process gave the conversation an obvious place to go in the moment.

That is a design decision, and it tends to get made long before anyone is thinking about claims. It gets made when an agency configures its AMS, builds its renewal workflow and defines what a complete file looks like. Those choices determine what will be available two years from now, and they are usually made with efficiency in mind rather than defensibility.

The same logic applies to what the record contains. A file showing what was discussed, what was recommended, and what the client chose can answer those E&O questions years later. While most agencies have a place for that kind of information, fewer make it a required part of the workflow. Fewer still apply the same standard across every office and service team.

Consistency matters more than most agencies expect. The person reconstructing events two years later was never involved and is often an attorney or a carrier claims examiner. Shorthand that was clear to the person who wrote it is ambiguous to everyone else. In comparison, an agency where every team documents the same way produces files that stand on their own.

An agency where each office developed its own habits produces a file that requires interpretation, which is the last thing anyone wants during a claim. Agencies that have grown through acquisition carry more of this than they realize. Two organizations arrive with two different ideas about where a record belongs and what a complete note looks like. The book and the people transfer at close, but the documentation standard takes years. In the meantime, the agency holds files built to two definitions of complete.

Agencies that want to strengthen their documentation can start with a written definition of what a complete file looks like, applied the same way everywhere. From there, they can build the documentation step into the workflow.

The same discipline pays in places that have nothing to do with claims. Agencies with reliable documentation practices onboard new hires faster, transition accounts more cleanly and give leadership a clearer view of how the business is running. It is often the difference between an agency that grows comfortably and one that grows while accumulating operational debt.

Kathryn Lerch is insurance solutions engineer at Fulcrum, an AI-powered workflow platform built for insurance brokerages. She brings 18 years of experience redesigning service workflows, leading technology implementations, and scaling operations across multi-location agencies. Prior to joining Fulcrum, Lerch served as vice president of agency operations at The Liberty Company Insurance Brokers, where she oversaw operations through more than 25 acquisitions.