Big “I” Professional Liability
Swiss Re Corporate Solutions is closely monitoring two types of inflation that may be relevant to your business and E&O insurance: consumer price index inflation and social inflation. In these continually uncertain times, we hope this will help you understand what we are looking at and not only how it affects E&O insurance, but how it affects your clients.
“Full coverage.” Does that phrase sound familiar? It should because we’ve heard it said by claimants in errors & omissions claim after errors & omissions claim. Why does the insured have inadequate limits?
“Once the toothpaste is out of the tube, it’s tough to get back in,” H.R. Haldeman, White House chief of staff under the Nixon Administration, famously observed. Half a century later, employers are finding the truth in the expression as they struggle to get their employees—many of whom were sent home to telework during the COVID-19 pandemic—to return to the office. In large numbers, those employees are saying, “No, thank you.”
Many readers may have heard that the first business income/civil authority lawsuit was filed in New Orleans on March 16, 2020. It’s no surprised it was filed; nor was it a surprise how quickly it was filed.
Over the last several days the VU has fielded several auto insurance related questions. These questions cannot be classed simply as personal auto or business auto questions because the most common question involves both polices.
Because of the fears (warranted or not) stemming from the Coronavirus, questions and answers regarding insurance policy response to the virus appear almost daily in various publications. To date, two articles have been published by the VU in relation to insurance and the virus.
COVID-19, better known as the Coronavirus, originated in Wuhan, China.
We begin with the Business Income’s Insuring Agreement:
Over the past two weeks, the VU has received countless questions concerning COVID-19 (the coronavirus) and the business income policy. As authorities require businesses to limit activities or shut down completely, the fear and reality of the loss of income looms large.
A pandemic is defined as, an outbreak of a disease that occurs over a wide geographic area and affects an exceptionally high proportion of the population.
Workers’ compensation is regulated at the state level. Although there are some benefits to this, there are also problems created.
As of this writing 38 states and countless cities and counties have enacted some form of stay-at-home order amid the pandemic panic arising from COVID-19. If the operation is not considered an “essential” business, its doors are shut – for now. How long such orders will or even can stay in place is anyone’s guess.
Pizza delivery is not new. Its history goes further back than you think. In fact, the first recoded request for pizza delivery occurred in 1889 – and it was by royalty. While in Naples, King Umberto I of Italy and Queen Margherita of Savoy made the first call. History doesn’t record if it was delivered in 30 minutes or less.
Currently 42 states are under a “stay-at-home,” “shelter-at-home” or some other similar order. However, this does not necessarily keep people in their homes.
The alleged failure to properly offer and procure umbrella coverage on a personal auto policy is a growing source of professional liability claims for large agents. However, you can mitigate your exposure to this with basic risk management practices, which can reduce the risk of such claims being successful.
Your client has the gold star of homeowners coverage: special form coverage, replacement cost on dwelling and contents, and inflation guard. The carrier does its magic at renewal and voila! The coverage limits are increased each year.
Your client has the gold star of homeowners coverage: special form coverage, replacement cost on dwelling and contents, and inflation guard. The carrier does its magic at renewal and voila! The coverage limits are increased each year.
With yet more apologies to William Shakespeare.
“That which we call a rose by any other name would smell as sweet.”
~Romeo and Juliet by William Shakespeare
While it is impossible to address every possible situation that might occur in this discussion, let’s look at a very simple example: A customer of the agency has a claim, the carrier refuses (validly or not) to pay the claim, the customer becomes upset and ultimately files a complaint against the agent or agency with the Department of Insurance.
Due to the dramatic changes in health insurance coverage for small businesses from enactment of the Affordable Care Act (ACA), employers are looking for alternatives to traditional health insurance programs in an effort to save money. Employers have consistently tried to provide for their employees and there are different methods of providing employee benefit plans.
Q: My E&O policy doesn’t mention whether unlicensed employees are covered. And since it doesn’t mention them, does that mean they don’t need to attend the E&O risk management seminars?
They say the more things change, the more they stay the same. The Ponemon Institute released it’s most recent reviews of the per capita costs associated with lost or stolen records by industry:
“Compliance,” like the term “audit,” can strike fear into our hearts. “Compliance” is a term that for many people has a negative connotation. Merriam-Webster defines “compliance” as:
You’ve heard that phrase over and over, and while it may be a cliché, it doesn’t make it any less true. And it can be especially true when you are trying to do everything you can to prevent an E&O claim.
On March 23, 2020, we sent notification that some carriers have asked agents to deny claims on the insurance company’s behalf. We recommended that agents not deny claims for several reasons enumerated within that notice.
Recently we were made aware that insurance carriers are directing their agencies to deny certain claims related to the COVID-19/coronavirus; most specifically business income claims. Reports are some carriers have even put this directive in writing.
Buying or selling an insurance agency or its book of business is, to say the least, a major decision. There are a host of factors for both the buyer and the seller to consider: the value of the business, a price point, personnel questions, property-related aspects,
time commitments, and many other issues to investigate, assess, negotiate and eventually agree on.
Buying or selling an insurance agency or its book of business is, to say the least, a major decision. There are a host of factors for both the buyer and the seller to consider: the value of the business, a price point, personnel questions, property-related aspects,
time commitments, and many other issues to investigate, assess, negotiate and eventually agree on.
Just as you are probably receiving a lot of questions from your customers about how their insurance will respond to the events surrounding the Coronavirus/COVID 19, we are also receiving a lot of questions from agents and brokers asking what they should do regarding those questions. How do you respond when someone asks you whether or not there is coverage under their policies?
Writer and philosopher George Santayana is remembered for the phrase, “Those who cannot remember the past are condemned to
repeat it.” Given the current state of affairs—coming off 2020 and a solid year of pandemic peaks and re-peaks—those words ought
to send chills up your spine.
Every insurance agent or agency feels some degree of pressure to grow their business. In fact, that pressure is felt in the broader world. We hear comments all the time like, “In this league, if you’re not improving, you’re getting worse,” from the pundit on ESPN. Or, “What’s your five-year plan to grow your business?” from the speaker at the seminar. And, of course, in the movie “The Graduate,” the character giving Dustin Hoffman advice: “Plastics!”
Catastrophic events like flooding, severe storms and wildfires are becoming increasingly commonplace. Since 1980, there have been 308 weather and climate disasters in which damages were $1 billion or more, at a total cost of $2.085 trillion, according to the National Oceanic and Atmospheric Administration (NOAA). In 2021 alone, there were 18 such events.
It’s not the kind of note you want to receive from a secret admirer: “Dear Business, we have decrypted all your data and blocked access to your computer systems. Unless you pay us millions of dollars, you will remain locked out and we will start posting your and your clients’ sensitive data online. Can’t wait to hear from you! The 24-hour clock has started! Love, Cybercriminal.”
It’s true, we spend a lot of webinar time and magazine ink repeating what we hope is a familiar refrain: Do not carelessly take on a higher duty to your customers than exists under your jurisdiction, most notably via website promises and marketing puffery. Why? A court may conclude, in one fell swoop, that you’ve both taken on a higher duty to your customer and failed to carry that burden to a successful conclusion.
Employment practices liability insurance is a coverage that most small businesses think they don’t need. Like the driver who realizes they should have buckled their seatbelt after an accident, the first clue that they’re mistaken often comes in the form of an Equal Employment Opportunity Commission (EEOC) complaint. Worse yet, the next thing a business will probably learn when they show up on their agent’s doorstep is that it is too late to get EPLI coverage to cover a lawsuit that started as an EEOC matter.
As sure as Shark Week arrives each summer, private companies and their directors and officers get sued. Having the right liability insurance in place could be like holding a running chainsaw when a shark falls on you from the sky during a tornado, allowing you to escape the belly of the beast safely.
Around my favorite time of year, Halloween, there are a lot of television shows and internet articles about scary things. It made me think that as an insurance agent errors and omissions aficionado, what is it that scares me and, in turn, what should scare YOU?
Every fire loss claim covered by an insurance policy begins and sometimes ends with the agent who sold the policy. However, avoiding an E&O claim related to a fire loss begins and always ends with you understanding the process. Remember, the fire loss doesn’t start with the fire, it starts with the application.
“If I’d only sent them the policy, then I wouldn’t be in this mess.” And if I had a nickel for every time I heard that from an agent when there was a claim and a carrier was denying coverage for an uncovered underlying claim, I’d be a rich man.
It happens to many agents.
Aunt Sally and Uncle Bill purchase some retail space and plan to rent it out. They need insurance and, of course, contact you since you are in the business. Granted, you have never placed a commercial policy of any kind before, much less in Florida, but how hard can it be? And the commission would be nice, too.
“You’re gonna need a bigger boat” is probably the most famous line from the movie “Jaws.” As Roy Scheider glimpses the great white shark for the first time, the look of fear on his face is priceless, realizing they’re in over their heads and facing a catastrophic ending.
Focus is key! From an errors and omissions (E&O) perspective, agents cannot lose focus during this disrupted work setup. Working from home does not change the fact that all procedures and processes that apply in the home office also apply at the “home” office.
Brand consultant David Airey once said: “Without professionalism, I’d be an amateur, and the clients I want don’t hire amateurs.”
Brand consultant David Airey once said: “Without professionalism, I’d be an amateur, and the clients I want don’t hire amateurs.”
In today’s litigious society, drivers need uninsured/underinsured motorist insurance and even umbrella coverage. Certain states have minimum automobile liability coverage requirements, while some states make UM/UIM coverage a requirement.
Builders risk insurance might appear to be an exotic animal in comparison to more mundane insurance products.
Protect your customers and yourself by offering uninsured/underinsured motorist coverage.
At some point in your insurance career you may have to decide, is it time to sell my agency? Or, if you’re making a transition in your insurance career, the opportunity arises to consider whether you should purchase an agency. In both situations, one of the most overlooked and under-considered aspects is what to do about the E&O policy.
Your Website Says WHAT?
Watch the first video in our six-part agency risk management series:
“The Attorney’s Perspective”
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Alexandria, VA 22314
eo@iiaba.net
800-221-7917
