Staff Licensing. Staff licensing may seem like such an obvious topic that it does not deserve even to be discussed in a blog. However, many facets exist to staff licensing that can and do create E&O exposures, and even possibly legal exposures.
First, as hopefully every readers knows, a person must be licensed to discuss coverages with an insured. I would suggest this is the absolute minimum standard. In fact, everyone that even reviews coverages, including processing certificates,should be licensed because processing correctly inherently requires knowledge if it is to be done correctly.
Second, in some agencies, unlicensed people sometimes process paper that requires a license. They use signature stamps and presigned forms of people who have licenses. So when something goes wrong with one of those accounts and the plaintiff’s attorney asks the signature holder why they did this or that, and they advise they never saw the file, do the odds of winning shift for or against the agency? How about when the plaintiff’s attorney then asks why an unlicensed person was acting as if they were a person with a license?
The third example has to do with the Federal Violent Crime Act. In general, this act prohibits agencies from hiring people with a criminal history. Each state has enacted this act differently so check with your state’s exact regulations. Violation though may be considered a legal violation on the part of the agency and agency owner.
Most agencies assume the state runs a background check when giving a person a license. Some do and some do not and some that do, do not always do a good job so it behooves an agency to do it themselves. Also, few states run new background checks on a regular basis. The law really does not differentiate between new hires and people employed for decades. The good news is that most states have specific means by which exceptions can be made for good employees, but the agency must go through these procedures to be in compliance.
Topics Professional Liability
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