Public D&O (directors & officers) insurance claims are on the rise, but the impact on other professional liability insurance lines is not clear. We can speculate about the rise in frequency and the impact of claim costs until we have concrete data. In our real estate professional practice, which includes professional liability for real estate agents, title & escrow agents, mortgage brokers, appraisers, etc, we have not seen the increase in claims activity that one might have expected at the start of the financial crisis. But claims against accountants are on the rise, according to an article on WebCPA (see here).
We've seen an increase in frequency of potential claims and requests for subpoena assistance, revealed Jeff Day, assistant vice president of underwriting for CNA, the underwriter for the American Institute of CPAs' Professional Liability Insurance Program. We do expect some carriers to make changes to their programs and possibly even leave the marketplace.
Expansion into areas where the professional has limited experience is a source of claims. Two areas in which CPAs are expanding, and may not have the requisite experience, are valuations and litigation support.
Risk management is important to any professional, and accountants are no different. One risk management tactic being advised for CPAs is client selection, and this approach is applicable to many professional classes.
There is a tendency when times are good to get aggressive in bringing in new clients, while client retention comes to the forefront in bad times… Accountants have a tendency of being very loyal… There's a fine line between loyalty to the client and going down with the ship.
There are plaintiffs attorneys actively soliciting clients, including this website dedicated to assisting clients sue CPAs in Florida(see here and here):
The Florida Accounting Malpractice Web Site is intended to assist consumers and lawyers who need more information about suing a CPA/accountant in Florida.
All professionals should be watchful for situations where client expectations may not be met, which can be a trigger for professional liability claims.
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