Hurricanes, earthquakes and other catastrophic events trigger numerous claims, and these typically result in some increased level of insurance agents E&O insurance claims – the Cat Echo in insurance agents E&O. As with many prior cats, Sandy is likely to trigger claims against insurance agents. We have commented on the Cat Echo exposure in previously (see here). In addition, a recent Insurance Journal article provides some suggestions for best practices in mitigating the exposure to insurance agents from catastrophes (see here).
Like most insurance agent E&O claims, insurance agent E&O claims triggered by a catastrophe typically emanate from a difference between the coverage an insured expects to receive and what the insured actually receives. For example, one insurance agent has received over 200 claims from customers out of Sandy, and is just beginning see some potential coverage issues. It is too early to tell whether this particular agent will experience any claims, and also whether their internal procedures will provide the defense needed.
The insurance agents E&O market is showing some signs of tightening (see here), but the market remains competitive. A change in claim frequency from Sandy could accelerate the change, but it is too early to tell whether there will be any significant rise in frequency.
Specialty Insurance Expertise: Tennant Risk Services
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