Insurance Agents E&O Claims Reminder

During this soft market, insurance agent claims are probably not top of mind, but they can come unexpectedly and obviously impact insurance agents E&O (professional liability) coverage.  A recent article in Insurance Journal (see here) points to some frequent causes of insurance agents claims and provides a reminder of some common ways to prevent the claims.

Typically, claim frequency declines somewhat during a soft market because insurers offer broader coverage and accounts tend not to move with coverage reductions.  During a hard market, underwriting changes can force some insureds to move to insurers with more restrictive coverage and other insureds to accept reduced coverage.  This can lead to unexpected claim declinations, which in turn can lead to insurance agent E&O claims.

This article is a good reminder – short and to the point – and probably should be read by agency personnel.  Some key points:

Frequent Causes of claims against insurance agents:

• Inaccurate recommendations
• Policy change, application and renewal errors
• Risk assessment errors

Preventive Measures:

• Clear internal communications
• Personnel training – both product knowledge and internal procedures
• Limits guidelines
• Standard checklists
• Coverage rejection acknowledgements

Coverage rejection acknowledgements are particularly important for employment practices liability insurance (EPL).  We have seen all types of insurance agents E&O claims at Mercator because of our large Insurance Agents E&O practice, including the failure to offer EPL coverage.  Other types of claims are relatively simple, like failing to make sure a claim notice was properly forwarded to an insurer, and some are more complex.  Claims examples are worth reviewing (see here).

Exposure to insurer insolvency does not get much attention now as the market is soft and there have been few insolvencies.  However, this can change fast if the market hardens due to poor results.  Insurer insolvencies can impact both insurance agents E&O and insurance agents E&O underwriters (see here).

Brought to you by Tennant Risk Services.

 

Comments

[Business Insurance Quotes]

Nice post. Errors and ommssions cost the industry a fortune every year!

[auto insurance quotes]

If you do not have proper procedures to insure that you do not make mistakes in handling client request, you will always have problems. Client communications should always be recorded in their files. Love the blog by the way.

[UK Business Insurance]

Another reason why comparing rates every year or even every other quarter becomes necessary.

[monument commercial insurance agency]

great reminder...due to the cost of claims in the form of money and time, I don't feel we remind ourselves enough of the potential exposure we navigate just in our daily routine.

[business insurance]

Very informetive post. hope the percentage of insolvencies will continue to stay low.

[Randall]

This post is short indeed but very straight to the point. Thanks for the reminder. And I agree with what everyone have said, let's wait till the market becomes stable and surely there should be visible improvement seen.

[commercial general liability insurance]

Very interesting point of view. as a small business I'm very happy that the market has not changed since that year (2009) and it didn't cause any huge differences. I also wish the government could help a little ;)

[cheap renters insurance]

i live in canada so things are a bit different up here and i have noticed that our economy moves parallel to yours.

[Sacramento water damage]

Thanks for the post. I agree with Mr Plainview's comment: "Agents with out past or pending claims can get cheaper E&O insurance because of their low risk status."

[Tom]

I'm with Eric Kam, it's all about genuine care for customers

[Business Insurance Alberta Canada]

Very informative for Canadians as well.

[RentersInsurance]

Very interesting...also makes you think about how much you pay for E and O insurance. If only the government could subsidize our business insurance costs;-)

[Business Insurance]

Insurance is definitely really important for those starting small businesses – whether working from home or in small offices.

[Eric Kam]

Thank you for the reminder. I think the best way to reduce/avoid unnecessary E&O claim is to provide great service to your clients. If you serve your client with your heart, you wouldn't make any mistake.

[ohs risk assessment and management]

Thanks for sharing your ideas about insurance.

[Melissa]

Thank you for making this post as a reminder. This will give me some benefits in my business too.
Melissa@Insurance Agent Forum

[Mxa]

Totally agree, it's good information. For more you can go also to www.insurancefact.info.

[Bendz]

Nice details. Useful information for this present situation. Keep it up from http://iniww.com

[Mr. Plainview]

Thanks for sharing. That was a good article. Leaves us with a great deal to consider with all of this. Agents with out past or pending claims can get cheaper E&O insurance because of their low risk status. One example I found is through http://eoforless.com/apply . Way less then what I hear some guys are paying. Anyway, I enjoy reading your posts- keep up the good work.

[Robert]

Wait until the market hardens and you'll see an improvement. When that will happen, though, I don't know.