Randy Cooper of Life Transition Planning in Tampa, Florida, says errors and omissions insurance is no substitute for a clear set of values. In a conversation with writer Marlene Y. Satter, Cooper laid out his thoughts.
All that's going on in the industry, and Wall Street, and the regulatory environment-it's individuals losing their own values and replacing them with the corporate or culture values that they're operating in. How can anybody think that [what happened in recent high-profile scandals] was right? What happened there? The rules aren't changed enough, and the SEC is asleep.
Why are we settling [E&O claims] with money? Why aren't we [getting offenders] out of the business? The truth is, they always generate more revenue than the award. They're allowed to stay there, and they finance it with E&O. That affects the rest of us. We didn't used to have E&O. We used to know how to walk past business that wasn't right, to say "no" to a customer who is saying, "that's what I want" because they're caught up in the moment. We have to be the professionals and walk past business that's not right. We have to say, "we'll have to wait on that." We used to do that. I still do it.
Something's changed. Our own values don't play a significant role. We have to be able to say [to the client on the verge of an unwise choice], "We're not going to make a decision today. I have to live with your situation until I really understand, and until I don't have to ask you more questions and clarify things. I want to mull this over and think about it carefully. I have to see it from your perspective, not just mine." We have to take the time to do that.
It's a climate of fear that sells E&O. There's a lot of room for abuse. When people don't rely on personal integrity, ethics, basic honesty, fair play, working with a person and taking the time to communicate effectively, it's easy to have complaints. When the focus is on sales and generating commissions, on the revenue of the firm, which has been the growing focus over the years, you have growing complaint levels. If you buy into all of that as a way of doing business, you'd better have E&O.