Joe the “insurance agent” wants a reasonably priced errors and omissions insurance policy for his independent agency that covers all the business activities his operation engages in, whether they are revenue producing or not.
He also wants his premium to be rated on his own loss experience and on his own business practices and procedures.
“Say it ain’t so,” says Joe, “that after 33 years in business without a single E&O claim, my premium is going to go up.”
Joe, in this case, is fictional, as is his female counterpart, Josephine (Jo). Their views on what their E&O coverage should look like are based on open ended responses by more than 1,000 agents who participated in the 2008 Insurance Journal Agency E&O Survey.
Joe and Jo had a lot to say. They want defense outside the limits of their policy and prefer occurrence rather than claims-made forms. They want their reasonably priced policy to cover the activities of a true multi-line agency that may offer property/casualty, life/health and employee benefits coverages. They want to know that they are protected if one of their partner companies becomes insolvent and they want to know whether an agent will be held responsible for the actions of the companies they represent.
A discounted policy with a minimum of exclusions for agencies that have never filed a claim was a common desire among those responding to the survey. “My agency pays ever increasing premium for coverage I have never used, yet the claims and underwriting experience for the E&O market show poor results,” one wrote. “Cater a policy for claims free agencies, and rate risk more towards personal lines vs. commercial lines agencies. Personal lines agents have a better loss experience than heavy commercial agencies … price the policy as such.”
Joe and Jo don’t see themselves as just “sellers of policies.” These agents consult with their clients and sometimes offer risk management and loss control advice. They want to be certain that such value-added services are covered under their E&O policy.
Josephine is concerned about exposure from her Web site, and she wants Internet liability coverage included in her policy. Joe, meanwhile, sees his membership in a cluster or profit sharing group as a positive for his agency. He doesn’t want to be charged extra because he belongs to such a group.
Sometimes Joe, or Jo, has to place risks in risk retention groups, captives, trusts or non-admitted companies that have a less than “A” rating. Both want to make sure they are covered if something goes wrong with such placements.
Joe is concerned about coverage exclusions for his employees that might sit on a board of an organization or participate in community activities. “This is especially cumbersome for non-profits,” writes Joe. “We encourage community participation and often write coverage for those groups. Our current carrier has excepted a couple of organizations by manuscript, but it always concerns us that we might not know of an employee’s involvement and coverage might be jeopardized.”
Finally, because she knows the best offense is a good defense, Jo wants to be recognized for her good loss history and the excellent risk management procedures she’s implemented in her agency with a better rating.
Joe, on the other hand, would like more loss prevention information from his E&O carrier and help in establishing better risk management techniques within his agency. And he would like a discount for his and his employees’ ongoing participation in E&O prevention classes.
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