Agents’ E&O: Crisis or Not’

As an agent or broker, it can be frustrating to reveal an exorbitant price tag on a premium for a client. No one likes to hear that their insurance coverage is difficult to obtain, and if that, at a high price. The situation compounds when the coverage is mandatory. Across the board, consumers are paying high prices for many types of insurance, all across the nation: workers’ comp in California, Florida, Texas; medical malpractice in Washington, Pennsylvania and Nevada; homeowners in Texas.

And from Massachusetts to Oregon, agents are feeling the squeeze themselves when it comes to E&O. Agents’ errors & omissions coverage is few and far between these days. Excessive litigation, an increase in E&O claims, and the tight reinsurance market all contribute to the lack of availability.

But just how difficult is it to get E&O? The agents seem to be voicing strong concerns about its availability, while others in the industry don’t seem as frazzled. It seems as though the coverage is there, but at a price. Draw your own conclusion on page IV of our National section, where we take a closer look at the agents’ E&O crisis in Higher Price, Lower Coverage: The Desert Climate of Agency E&O.

As an agent, your best defense is to do everything within your power to protect yourself from claims. And agents are susceptible to all sorts of loopholes: failure to place coverage promptly; failure to increase limits; failure to recommend needed coverage, failure to explain limitations; verbal extensions of nonexistent coverage; inadvertent cancellation or failure to renew; failure to place coverage with a solvent insurer, and the list goes on…

That’s why it’s important for agents to research the insurance company they are placing the coverage with to make sure they are a financially strong carrier with little chance for insolvency. Written documentation is crucial for the agents’ defense as well. Make sure everything is in writing, from the casual phone call to your clients to renewals and more.

Also on page VI of our National section, Mike Kizlinski of Pasadena, Calif.-based ARC West Coast Excess & Surplus Brokerage shares some secrets behind underwriting EPL policies in Underwriting The Guessing Game of EPL Premiums. Kizlinski offers tips for agents to help their clients make their EPL applications more attractive.

Give us your take on the E&O situation. How hard has it been for you to get coverage? Are your premiums through the roof? Let us know.