(Excerpted from the November 2006 issue of Healthcare Risk Management)
Once you have purchased Errors and Omissions (E&O) or Directors and Officers (D&O) coverages, that does not mean that you are finished with addressing this issue. The coverage must be reviewed and updated on a regular basis, advised R. Stephen Trosty, JD, MHA, CPHRM, director of risk management for American Physicians in East Lansing, Michigan.
When first obtaining this coverage, Trosty says risk managers should first do an organization-wide assessment of what tasks executives and administrators are engaged in and which ones might lead to the types of allegations covered by E&O and D&O insurance. That task provides a first assessment of who needs coverage. This is an important step because you want to cover anyone who is at risk, but you do not want to pay to insure others. After identifying who should be covered, you then need to determine the amount of coverage that should be purchased.
Once you do that and obtain coverage, it will be necessary to go through the whole process periodically, perhaps annually, to see if changes are needed. As people move in and out of covered positions and their duties change, it may be necessary to update the coverage specifications for your E&O and D&O.
“You don't want to keep paying for coverage for someone who does not need it anymore and you certainly don't want a claim to arise and find out that you never added the new-hire to the coverage.' says Trosty. “It is also necessary to take a new look once in a while at what activities your organization is involved in, any mergers and/or acquisitions, and see how that affects your coverage and how much coverage you need.
If you would like a review of your current E&O and D&O coverages and exposures, please contact RGI Insurance Services at 1-800-852-8872 or by e-mail to info@RGIinsurance.com,
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