There is the added pressure of high deductibles, virtually ensuring an agent is self-insured for what could be a substantial portion of the suit before defense coverage kick-in. These economic pressures make it more advantageous for the agent to settle instead of fighting the suit through the system.

He noted that virtually any dissatisfaction with an insurance product's claim management can cause an E&O suit to be filed, and often attorneys "sue everyone in sight" who is involved in the transaction in search of deep pockets.

In the end, no matter how hard the producer tries, the agent will never regain what was lost in the E&O suit, he said.

For example, if a wholesale agent makes a mistake that costs the client money, the retail producer stands to lose the client because of the dissatisfaction. The producer will also probably lose a wholesale agent because the producer sued the wholesaler to protect his or her interests. The producer also loses because of the time he or she had to spend dealing with the case in deposition, meetings and legal proceedings.

"When you deal with excess lines, you better be careful," he cautioned.

While there may be no surefire way to prevent an E&O suit, Mr. Paige advised agents to take steps to protect themselves. These include an auditing process and documenting changes to policies that decrease a client's coverage or increases exposure to risk.

"Everything changes later if you don't write it down," Mr. Paige said, pointing out how a client's memory can be selective with the facts.

He also cautioned agents to do their due diligence when placing risks, especially with new business they are not familiar with. There is too much temptation on the part of brokers to take on business they are not familiar with and hope they can figure it out as they go along.

Agents, Mr. Paige emphasized, need a firm understanding of what they are writing to avoid liability problems in the future.