Description

Often it takes an uncovered loss to create an E&O claim. Generally speaking, an uncovered loss would be caused by: 1 - A lack of appropriate type of coverage, or 2 -Inadequate values or limits to cover the full loss. E&O claims don’t discriminate by the size or location of agencies. All agencies, regardless of staff size, must proactively address E&O risk management! Statistics show that annually one in seven insurance agencies and brokerages will report a potential E&O claim. Statistics also indicate that approximately 50% of those reported claims are closed with no defense reserves or indemnity payment made. E&O claims statistics have fluctuated over the years and are often influenced by market cycles which drive changing behavior of insurance buyers, carriers, and agents. Catastrophic events such as tornados, hurricanes, flooding, earthquakes, and wildfires can be the catalyst for the discovery of uncovered losses that lead to E&O claims against agents. In those cases where the claim goes forward, the agency may or may not have actually made a mistake. Just because an E&O claim was made against you doesn’t mean that the agency staff did anything wrong or breached your legal duty. It may simply be that the agency finds itself in the uncomfortable situation of an allegation being made against them because of their inability to prove that they are not responsible. Unfortunately, many E&O claims allegations are “he said, she said” and this is where documentation, combined with good E&O risk management procedures that are invariably followed, is a key defense mechanism.

Approved for 3 CEC's - Approved for E&O Policy credits.