E&O Insurance for P&C Agents

Professional liability insurance is a linchpin of most P&C agents’ product portfolios. You understand its importance for your business clients and work hard to assess risks and recommend appropriate E&O insurance solutions. What you might not fully appreciate is how important E&O insurance has become to your own businesses, largely due to sweeping changes in the P&C insurance marketplace.

How has the marketplace changed in recent years? According to an analysis conducted by the National Ethics Association, sponsor of EOforLess, five major industry shifts are changing how P&C agents operate, greatly expanding their business risks. The shifts include:

1. The industry is witnessing the advent of new technology and increasing numbers of insurers selling direct to consumers. This is forcing agencies to adopt new business models.
2. Agents are moving away from the role of “product peddler.”  They’re no longer focusing as much on the sale of commoditized personal-lines insurance products.
3. Agents are also shifting to commercial-lines products. That’s where the profits are and where agencies can deliver added value to their customers and carrier partners.
4. They’re also expanding their product portfolios with new coverage types such as cyber liability. This replaces vanishing margins from commoditized personal lines.
5. Other traditional roles are disappearing, as well. These include doing field risk selection (carriers now do that through predictive modeling) and being the sole point of customer service (carriers are now using multiple technology-enabled service platforms).

“P&C agents work in a brave new world,” says Steven R. McCarty, Co-Chairman and Founder of both the National Ethics Association and EOforLess, which provides E&O insurance for P&C agents, as well as for other types of financial professionals. “Their risks of doing business have grown exponentially, while their ability to pay ever increasing premiums for E&O insurance has diminished. This puts many P&C agents in a bind.”

For one thing, McCarty says, P&C agents today are more likely to operate as trusted advisors than as mere “order takers.” They’re also adding more exposures and products to their offerings in order to respond to their clients’ evolving needs. At the same time, they are making more use of cloud technology, social media, and agency automation, while stepping up their involvement with commercial-lines products. Finally, many P&C agents today are operating in states that are imposing higher standards of care than in the past.

“All of this paints a picture of P&C agents facing ever greater risks, which may well spark E&O disputes,” McCarty warns. “At the same time, escalating E&O insurance premiums make it even tougher for them to secure the protection they need at a price they can afford.”

Fortunately, the E&O insurance industry has also evolved, providing E&O insurance for P&C agents looking for quality coverage at an affordable price. The hallmarks of this approach are as follows:

• Affordable coverage provided through the efficiency of group insurance.
• Streamlined E&O insurance underwriting based on asking a limited number of risk assessment questions.
• The elimination of broker intermediaries and of the need to secure carrier quotes, which complicates the buying process and lengthens the amount of time between application and policy issue.
• The ability to lower premiums for preferred-risk P&C agents, rather than having good risks subsidize poor risks.
• Finally, allowing P&C agents to easily shop for and buy E&O insurance online.

EOforLess, the E&O insurance affiliate of the National Ethics Association, has been on the leading edge of this approach. It has developed an innovative platform called EOforLess.com that helps P&C agents buy E&O insurance online. Using this platform, P&C agents can quickly. . .

• select a high-quality E&O insurance policy,
• answer 10 risk-profiling questions,
• insert their payment information, and
• bind and print a policy in five minutes or less.

This frees up time for P&C agents to manage their businesses in an increasingly complex world.

Facts about E&O for Property & Casualty

While P&C agents may recommend professional liability or E&O insurance policies to their clients, many forget that their own risks of getting embroiled in an E&O lawsuit can be substantial. According to Swiss Re Corporate Solutions, P&C agents often make mistakes that  trigger client complaints and lawsuits, including the following:

• Failing to secure appropriate coverage or recommend policies with adequate limits.
• Failing to properly explain coverage exclusions or other policy limitations.
• Dropping the ball in terms of properly determining the value of a client’s property.
• Not mentioning co-insurance penalties that might apply should a claim occur.
• Misrepresenting the actual features and benefits of an insurance policy.
• Mishandling a client’s insurance claim, which results in the insurance company denying it.
• Breaching their fiduciary duties to their clients.
• Holding themselves out as risk-management experts rather than as insurance agents.

Fortunately, P&C agents with good E&O insurance have safeguards in place should they make these or other common mistakes. Their E&O policies typically provide two levels of benefits:

• money to retain an attorney to defend them in court and
• funds to make good on judgments and court costs should the agents lose.

“With benefits such as these, P&C agents can operate their businesses knowing they’re fully protected in the event an E&O claim arises,” says McCarty. “This means they can continue to focus on their business while the case is in process, instead of worrying about retaining a lawyer, covering legal fees, and paying for potentially hundreds of thousands or even millions of dollars in legal judgments. E&O insurance greatly minimizes all those worries.”

Property and Casualty Agents E&O Insurance

In today’s environment, E&O insurance for property and casualty agents should be affordable and easy to shop for. But it must also provide the right coverage features from a financially strong insurance company. Agents who buy E&O insurance from EOforLess.com know they will be well protected against growing market risks.

For example, the EOforLess policy provides a $1 million limit of liability for each claim and a $1 million limit for all claims under each Certificate of Insurance. The total policy aggregate for all claims under all Certificates of Insurance is $10 million.

In addition to offering P&C agents highly competitive rates, the EOforLess property and casualty agents E&O insurance provides additional features such as:

• Prior acts coverage going back to the first continuous E&O policy issued to the agent.
• An extended reporting period available if either insured or insurer cancels or non-renews.
• Quick and easy online enrollment and renewal, with the Certificate of Insurance printable online upon satisfactory confirmation of premium payment.
• Coverage extending to spouses, domestic partners, estates, heirs or legal representatives for claims arising out of their status as such.
• Policy non-cancelable by insurer except for non-payment of premium.
• Broad definition of claim includes written demands and civil proceedings for monetary damages.

What’s more, by virtue of buying E&O insurance from EOforLess.com, P&C agents also become members of the National Ethics Association, a professional trade group that helps members do business ethically and responsibly in complex times. Established in 2003, the Association helps its members grow their professional reputations while also enhancing their digital marketing efforts.

In addition to sponsoring E&O insurance for P&C agents, it also offers credibility icons to enhance lead generation; ethics and compliance content that help P&C agents stay out of trouble; and certified background checks that accelerate the consumer sales process for agents who qualify. What’s more, NEA membership gives members access to many different purchase discounts from companies such as Costco, Dell, Verizon, and Staples.

“P&C agents today face difficult challenges, not the least of which is managing increasingly complicated enterprises in an environment of mounting risk,” says Steven R. McCarty of NEA/EOforLess. “The last thing they need is to hassle with their E&O insurance provider or pay too much for it. With our E&O insurance for P&C agents, we’ve eliminated those worries for thousands of insurance professionals who can now focus on growing their businesses instead. That’s a true win/win for all concerned.”

 

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