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The Terrible Twenties: A look back at the E&O lessons to be learned from 2022

As we start our journey through 2023—The Year of the Customer—there are plenty of those “free lessons” to be gained from 2022. For months, insurance professionals have stressed the need to address inflationary pressures on property values and rebuilding costs. However, there are other changes manifesting as the insurance industry accelerates out of the pandemic.  

It’s no surprise that auto policies generated the most E&O claims in 2022, fully rebounding from the 2020 trough caused by a reduction in miles driven and replaced policies. Similarly, E&O claims on motorcycle policies rose in 2021 and 2022.  

Also, it is not surprising that the 2020 dip in homeowners claims normalized in 2021 and increased in 2022 given the widespread return to pre-pandemic living patterns. That may also explain why dwelling fire and farm owners claims, each of which dropped in 2021, rebounded substantially in 2022.  

Looking only at claims reported and paid in 2022, these same themes play out as four of the top 20 largest pay-outs were on commercial property policies; three were on commercial general liability, including three of the top four; three were on dwelling fire policies; and three were on farm policies. The message here is clear: If you frequently work in these areas—and especially if you only dabble—E&O claims are on the rise. 

How did those claims happen? In terms of process missteps, the main culprits were “policy change errors,” which rose from 10% of all claims in 2020 to 15% in 2021, which is roughly what they were in 2018 and 2019, and to 20% in 2022. Similarly, “policy issuance errors” rose slightly in 2022 and “policy delivery errors” increased by 2%.  

Taken as a group, these are troubling developments. Some appellate courts are displaying a greater willingness to impose the duty to read the policies they receive on insurance customers. Others are starting the clock on the statute of limitations at policy delivery instead of at the time of the loss. Those are very positive decisions for insurance professionals. However, you cannot take advantage of them if you don’t get that new, renewed or changed policy into your customer’s hands.  

Looking again at the top 20 claims, six were policy change errors, four involved policy renewal or replacement, and four involved recommendation errors. 

Viewing these terrible 20 by the type of customer, half of them were on new business for existing or, more commonly, new clients. The rest are for existing customers involving mid-term changes or renewals. Mid-term changes alone have gone from 8% of claims in 2020, to 12% in 2021 and 14% in 2022.  

These E&O claims manifest themselves in dozens of different ways. Ultimately, though, far and away the most common error is a simple failure to procure the coverage your customer requested, accounting for 36% of all claims in 2022 and seven of the top 20. Granted, customer memories can be fuzzy at best, which is being charitable, but those figures are no surprise.  

Nobody remembers a recommendation made during a five-minute discussion three years ago. If you don’t capture that conversation in a contemporaneous, time-stamped file note or email, it didn’t happen. Plain and simple. 

A wise man once said, “The past cannot be changed. The future is yet in your power.” Now is the time to study the past so you can learn from—and avoid—the mistakes your competitors made. If not, the odds are that you’ll be featured in this column next year. 

Matthew Davis is a vice president and claims manager with Swiss Re Corporate Solutions and works out of the Kansas City office. Insurance products underwritten by Westport Insurance Corporation and Swiss Re Corporate Solutions America Insurance Corporation, Kansas City, Missouri, members of Swiss Re Corporate Solutions. 

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders.  

Copyright © 2023, Big I Advantage®, Inc. All rights reserved. No part of this material may be used or reproduced in any manner without the prior written permission from Big I Advantage®. For permission or further information, contact Agency E&O Risk Manager, 127 South Peyton Street, Alexandria, VA 22314 or email at 


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