PACO Ins agents E&O

[Rob]

Anyone familiar with PACO for insurance agents E&O?

[InsAgentSF]

We have our E&O through them

[Rob]

I heard that there is an endorsement on the policy making it "auditable". Do you know anything about this?

[mhutch69]

I know it is admitted paper in CA and AZ. I have obtained several quotes and they are competitive. If they have a clause allowing them to audit certain information on the application, they are smart.

I can not tell you how many producers "lowball" their numbers in order to lower their E & O quotes. In the event of a claim, the representations on the application better be accurate. I can see these "claims made" policy forms allowing complete recission of the policy in the event of misrepresentation.

Hutch

[Rob]

I know it is admitted paper in CA and AZ. I have obtained several quotes and they are competitive. If they have a clause allowing them to audit certain information on the application, they are smart.

I can not tell you how many producers "lowball" their numbers in order to lower their E & O quotes. In the event of a claim, the representations on the application better be accurate. I can see these "claims made" policy forms allowing complete recission of the policy in the event of misrepresentation.

Hutch

I can see your point, however it depends on what basis they would deny a claim as to whether it is a reasonable practice. For example, if they ask you to list every carrier you place business with and you do so, then you place business during the year with a carrier that you did not list, then there is a claim, and they audit the info and discover that the carrier was not listed, can they deny the claim? Should they deny the claim?

[mhutch69]

I am not talking about placing business with a new company that can be documented as to when your appointment or contract to produce took place. I am talking about telling an E & O company you are producing $500,000 with a certain company when you are actually producing $2,500,000 with that company. Regardless of which company you have a claim pending against, an audit would indicate you are producing a significantly greater amount of business than stated upon the application. Thereby greatly increasing the number of individual transactions and consequently the risk of error to the E & O company.

Just a picture from my standpoint. I am not speaking of a specific instance but would NOT want to have misrepresented my production and need to file a claim due to a large error. If the E & O company chooses to audit the app info, I think they have rights with respect to misrepresentation.

Hutch

[NYUND]

PACO is a small company that specializes in Podiatrists professional liability insurance. Why would you put your insurance agency e&o with them?

[Rob]

PACO is a small company that specializes in Podiatrists professional liability insurance. Why would you put your insurance agency e&o with them?

Maybe because they offer an insurance agents E&O form on A rated, admitted paper and hundreds of other insurance agents and brokers are insured with them.

[Rob]

When you say small, how small?

I'm being advised to steer clear because:

low surplus?

auditable

but I see they have an A- V rating and if I'm accurate on the app and its audited, who cares?

[NYUND]

Rating: A- (Excellent)
Financial Size Category: V ($10 million to $25 million)
Outlook: Stable
Action: Affirmed
Effective Date: July 13, 2006

The surplus is very low.

[Rob]

Isn't that what reinsurance is for?

[NYUND]

How much reinsurance do they have?

[Rob]

good question! Where can we find that info?

[NYUND]

You can't but from experience I can tell you that the primary company is usually required to take a significant net position in any treaty. $10M to $25M in surplus does not go that far. So it would still be possible for a carrier to become insolvent with a treaty in place.
I would also be careful relying on the expertise of a company that specializes in Podiatrists E&O to handle a claim against a totally unrelated class of business.

[NYUND]

PACO is owned by PICA. This is from its website:
Podiatric physicians are an integral part of PICA. Our Board of Directors features 11 of 14 members who are practicing podiatric physicians, and the Underwriting, Claims and Risk Management Committees of the Board are comprised of podiatrists. In fact, podiatrists are actively involved in every aspect of the company, and we are known for the quality experts and attorneys who handle claims for our policyholders.

Buying from PACO means that you are relying on Podiatrists to handle your E&O. You wouldn't go to your dermatologist to get your homeowners insurance. Why would you go to your podiatrist to get your E&O?