Be wary if the client thinks she is doing you a favor by giving you her business. The client relationship is a two-way street; you provide a service in exchange for compensation. If the client does not hold this view, it may indicate that she has unreasonable expectations of what you should do for her.

You can't turn away all prospective clients who complain about their existing brokers . You need to evaluate just how dangerous someone is, and whether it is worth your while to accept the business. Often, the danger is not so obvious in the early stages of a new relationship.

The most obvious example is the client who pays insurance premiums late, which leads to cancellation. You might even arrange premium financing and get the policy reinstated, but odds are this client will continue the behavior. Ultimately, the client may experience an uncovered loss, and then seek to blame you for not ensuring that the policy was reinstated.

Be wary of the client who asks you for favors, especially when they involve stepping outside of your core areas of expertise, as well as the client who is in a rush to quickly place coverage. While accommodating a client under these circumstances can distinguish you from a service standpoint, these scenarios also present fertile breeding ground for E&O claims, and you should avoid them as much as possible.

These are the most obvious problems that may not surface until several years into the relationship, even though there may have been warning signs at the outset. From a risk management standpoint, you should seriously consider whether it is advisable to keep such clients. Once these particular problems arise—late payment or non-payment of premium, and failure to timely communicate with the broker—they are not likely to correct themselves, and will often lead to E&O claims.

Blame Game

I have defended insurance brokers who were sued for policy lapses in many cases. Even though the insured allowed the policy to cancel due to non-payment, once an employee is injured and has no coverage, you can expect a claim that you should have prevented the cancellation. Although it may be a defensible claim, it is an E&O claim from a problem client nonetheless. This is often the same client who rarely responds to your inquiries and reminders, but demands your immediate response.