These independent contractors, as well as many official corporate employees, may further maintain offices at home, conducting business by e-mail, cell phone or the Internet, or from the local coffee shop for that matter.

This new layer of exposures or classes of potential liability presents many new underwriting challenges.

For example, are these independent consultants held to “different standards of care” than licensed professionals like attorneys and accountants or those employed directly by a company?

Are all of their professional “services” covered in their policies?

How does working at home–or working virtually–change the nature and responsibility of third-party bodily injury exposures resulting from the professional services they render from their home?

These questions detail just a few of the issues confronting insurers and MGAs who participate in the miscellaneous E&O market. Indeed, the rapidly changing nature of global business, the growth of high-tech interdependent commercial exposures, and the unprecedented potential security and liability exposures wrought by terrorism are irreversibly altering the exposure landscape of miscellaneous E&O insurance.

The ledger sheet doesnt just include the new legion of professionals, consultants and quasi-professionals who deliver their services in a less “face-to-face” manner than ever beforefrom both real and virtual workplaces.

Beyond these is an expanded scope of exposures emerging in light of what we might describe as “the total reach of terrorism.” There are also exposures arising from government regulations and novel business organizations. And finally, there are also greater E&O exposures for insurance agents, themselves, as they take on the roles of risk manager and advisor to their clients.

We wont go so far as Charles Dickens in calling this the best of times and the worst of times. It is obvious, however, that the potential for underwriting growth in miscellaneous E&O insurance must be tempered by our need to fully assess the exposures, claims and profit potential of specific underwriting.

In many cases, the full risks are much greater than might first seem apparent; in other cases, there is simply too little underwriting and loss history to sell policies willy-nilly.

As we discuss several areas of importance and growth potential going forward for miscellaneous E&O insurance, we urge the independent agents and their servicing MGAs to be mindful of this double-edged sword we now face, especially in light of the current hard market across most all coverage areas.

Consider, for example, the consequences of the terrorist attacks of 9/11 on the miscellaneous E&O segment. While the link may not be immediately obvious, the impact of 9/11 is undeniable. For example, in a less certain world, what is the standard of expectation for the architects and engineers who design, plan and supervise construction of office towers? Definitely, much greater.

What about those responsible for security systems, sprinkler systems, or stairwells, elevators and related egress systems? Many professionals are being held to a much greater standard of expected performance than ever before.

Furthermore, even before that tragic day, we had already witnessed a wider net being thrown out to snare E&O culpability as a result of federal, state and local regulation, by more demanding end consumers, and by the creativity of far-reaching litigators.

These same professionals or quasi-professionals are also practicing in a global commercial environment where they may be “doing business” in jurisdictions they were not even aware of, or among interlocking business entities.

Handle a small project for a firm in your hometown? Its parent company may be in Switzerland.

Design an assembly line as an independent constructor for a smaller manufacturing assembly in Indiana? The components may find their way into products on five continents, two or three companies downstream from the original customer.

What about information we publish or opinions expressed on a professional Web page that are passed on beyond our control and then acted upon?

The concept of expanded liability is clearly seen in computer and technology consulting, which may comprise many components or systems.

The reliability and security of the computer and server networks, communications, electronic data exchanges, sales databases, private networks, e-commerce, and other systems that support business-to-business or business-to-consumer commerce are all dependent on technology consultants.

What if I devise a nightly back-up that sends the computer crashing, with a loss of important files or total shutdown of a business for several weeks?

Increasing regulations and new forms of business organization are also impacting and expanding E&O exposure, especially in fields like health care with its mix of licensed, professional and administrative gatekeepers, third-party payers, and the strong role played by state and federal Medicaid and Medicare systems. The result is more shared, even unequal liability potential, as patients “receive” care through several layers of entities, each with its own legal structure.

Finally, we would like to awaken insurance agents to their greater chance of being drawn into an E&O claim. If an agent recommends and writes a comprehensive portfolio of insurance coverages, he or she assumes the position of an advisor or risk management consultant. Should the insured suffer an E&O loss that is denied, he or she may sue the agent for not providing comprehensive enough E&O coverage.

Agents must educate all professional service providers of their risk exposure and the need to continuously educate themselves with respect to the ever-changing risk exposure landscape. Clients choose whether to act on the agents recommendations. But failure to consult, foresee and recommend a suitable policy may leave an agent in an indefensible and costly position.

In summary, miscellaneous E&O insurance can be a tough class of business to write. But we believe it can be a great practice builder for agents in todays hard market and an excellent opportunity for MGAs who understand the inherent risks and exposures, as well as how to write and place these coverages and exclusions.

If there were ever an area of insurance where “nothing is etched in stone,” given the fluidity and creativity and fast-changing relationships of modern global, high-tech commerce, this is the one. It will take specialized underwriting skills and resources to exploit the new coverage opportunities we just discussed.

While high-tech captures our imagination, dont neglect the ways in which new modes of working and business are impacting older, “hard goods” industries like manufacturing or construction design contracting. The boom in home construction and remodeling, for example, is generating its own corps of quasi-professionals who must understand not just hammer and nails, but also local and national building codes, environmental issues, or materials safety.

Think far and look close by.

Your existing clients for personal lines or property-casualty might also be professionals who are not properly protected against E&O exposures.

Understand the exposures, work with a credible and experienced MGA, and place them carefully in this modern era of interdependent global commerce.

David J. Price (left) is executive vice president and chief underwriting officer for Burns & Wilcox Ltd. in Farmington, Mich. Kenneth A. Schneider is vice president and director of product development for Burns & Wilcox Ltd.

Reproduced from National Underwriter Edition, May 19, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.