E&O INSURANCE seems to be resisting the general softening-market trend. Prices for E&O coverage have increased significantly. A bigger problem for agencies is reduced underwriting tolerance for claims; carriers are less forgiving than they have been. Agencies are trying harder than ever to prevent E&O claims, but many are failing to guard against two possible types because they are unaware the exposures exist: lawsuits brought against them by their carriers and the risks involved with E&S markets.
Carriers suing their own agencies
In the past, agencies and their companies were usually on the same team when clients filed E&O lawsuits. This was an advantage for agencies because the companies provided much-needed support. But anecdotal evidence suggests that company lawsuits against agencies are responsible for an increasing share of E&O suits. Agencies must now exercise the type of caution with their companies that they have always used with insureds. They must “document, document, document” discussions of coverage with companies and ensure all applications they submit are accurate and complete. Failure to do so is a big E&O exposure.
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