When Tomorrow Never Comes: The Challenge of Business Continuity Planning


Agents ‘of a certain age’ will recall Popeye cartoon character “Wimpy” and his perpetual promise: “I’ll gladly pay you Tuesday for a hamburger today.” Devoted viewers also recall, though, that Tuesday never seemed to arrive.

Looming on the horizon for many of us is that red letter day most of us look forward to, a few dread and everyone arrives at one way or another – retirement. But, there are other, unforeseeable outcomes lurking out there that may get in the way of your workplace farewell, notably death and disability.

What will happen to your agency if one of those things occurs unexpectedly, and how can you minimize the disruption they bring?

Thoughtful business continuity planning is the obvious prescription, but who has time for that? After all, Wimpy would have you believe planning for the future is something that can be taken care of Tuesday – and many of you are listening to him.

Is that wise? Below are a few examples of actual claims involving a retired, deceased, or disabled agency owner. Some valuable lessons can be learned from the experiences of others that should change “I’ll do it tomorrow” attitudes into “I’ll do it today!”

Untimely Demise

One of our insured agency owners personally handled the account of a customer who had a motor vehicle accident for which there was no auto coverage in place. The customer proceeded to make an E&O claim against the agency alleging the lack of auto coverage was due to an error by the agency owner. Sadly, in the midst of the ensuing lawsuit, the owner unexpectedly passed away.

Because it was one of the household’s major assets, the grieving widow had little choice but to take over running the agency. She had no experience in insurance or running a business and, to make matters worse, had no idea where or how to locate documents and information to assist in the defense of the agency.

Without the testimony of the owner, the agency had to rely on a long-time employee to assist with locating documents, activity log notes, and phone log notes. Fortuitously, that loyal employee was able to locate documents and activity log notes that resulted in a favorable outcome for the agency. Had the owner/agent not been diligent in documenting his file, including verbal communications with the claimant, even with the assistance of surviving employees this claim likely would have had a different outcome, because there was no live witness to dispute the customer’s version of events.

The failure of the owner of the agency to put a contingency plan in place in the event of his untimely death placed the burden of this lawsuit squarely in the lap of his newly bereaved spouse. Fortunately, this agency had a seasoned, long-time employee that could step in and locate the information that assisted with the favorable outcome.

What is your plan to help your family grapple with your untimely demise? Having a succession plan in place is essential to the business continuity of your agency and alleviation of the added stress your family, customers and employees already face in the wake of your untimely demise.


Another insured agency owner had a stroke that left him permanently incapacitated. The owner’s daughter had started her career at her father’s agency, moved to another state and worked in a much larger agency in a large city. Upon learning of her father’s stroke, the daughter returned home to assume the helm of the family agency.

She arrived home to find that a 30-year employee of the agency had taken over and claimed the agency as her own. Her story: she was going to leave 10 years earlier to start her own agency when the owner talked her out of it. Instead, her commissions were decreased slightly as a way for her to buy her way into agency ownership. According to her, the owner told her that, upon his retirement, the agency would be hers. In fact, there were some notes and draft agreements drawn up along with the reduction in commissions, but nothing formal was ever completed, much less signed.

Westport denied coverage because internal ownership disputes are not covered under an E&O policy. The last we knew, both the daughter and longtime employee firmly believed they were the rightful owner of the agency and each was spending money fighting it out in court. Is this the legacy the agency owner intended?


Contrasted with the first two examples, a third insured agency owner managed to sell his agency and retire after a long, successful career. He turned over lock, stock, and barrel to the new owner and rode off into the sunset. For their part, the new owners merged the purchased agency customers into their existing insurance agency.

A few years later a lawsuit was filed by a customer against the former agency, prompting our insured to report the claim to Westport Insurance under the tail coverage he had purchased. When his file documents were requested by counsel for both sides, the retired agency owner had a shock: the purchasing agency had destroyed his agency records. The former owner and Westport Insurance were left trying to defend a suit with no agency file. To make matters worse, the record retention requirement of that state was seven years. Thus, the documents were destroyed at a time when the agency was under a legal obligation to maintain them.

This had unfortunate legal implications for the agency in the defense of the lawsuit.  Defense counsel had to attempt to recreate the file and craft legal defenses for having destroyed the documents prematurely, which all resulted in sizeable defense costs. Due to the lack of documentation for the agency, the case was settled with the plaintiff under less favorable terms than the (undocumented) recollections of the agency owner would suggest.

When the day comes to retire, a copy of all customer files should be retained for the minimum document retention period followed in your state. While this agency did not destroy the records directly, the purchasing agency did not consider the time requirements and legal implications prior to destroying the former agency records prematurely. Nonetheless, the former agency was penalized for the decisions of the purchasing agency, which could have been avoided by scanning or copying the customer files and preserving the activity log notes.

Having a business continuity plan in place, open communication, good documentation, and forethought are key to your agency continuing to operate, defend itself against E&O claims, and avoid statutory violations. It is never too early to put a plan in place to protect your family, your partners, your employees and your loyal customers.

Of course, noted organizational expert Wimpy would still have you believe that today is too busy, that your calendar is too full. You would gladly formulate the perfect business continuity plan … on Tuesday. General George Patton had the right response: “A good plan today is better than a perfect plan tomorrow.”

That’s sound advice because experience teaches that, all too often, ‘tomorrow’ never comes.

Janice S. Blanton, is an assistant vice president, claims specialist with Swiss Re Corporate Solutions and teleworks out of the office in Overland Park, Kansas. Insurance products underwritten by Westport Insurance Corporation, Overland Park, Kansas, a member of Swiss Re Corporate Solutions.


IIAT Advantage E&O Offers Professional Liability for the Texas Independent Agent

Call IIAT’s Gunnar Kephart at 800.880.7428 to learn how IIAT Advantage E&O can help protect your business against E&O claims. Learn more.

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