ERRORS & OMISSIONS
AVOIDING E & O IN A HARDENING MARKET
Written By : Beth Smoller , KAIA General Counsel
As I write this article it ’ s a cold , rainy day in Kansas and the first signs of winter have literally blown in overnight . What has been primarily rain overnight briefly turned to snow ( and then back to rain ) long enough to leave random patches of white in the grass and on our deck . Yesterday ’ s 78 ° with 25 mph winds was a welcome warm day , though it did blow in quite the change to which we Kansans are quite accustomed . The drastic change in weather is quite common in the Midwest and something we ’ re all used to , but it has me thinking about the changing nature of insurance . And yes , I fully realize how nerdy that makes me !
We are nearing the end of 2022 and I think we can all agree the insurance market continues to harden . As a relative “ youngster ” in the insurance industry , I can honestly say I ’ ve not seen a true hard market in my almost 18 years in the industry but it certainly appears that rates , premiums , and underwriting standards have hardened substantially . With a hardening market , agents will be re-marketing clients ’ policies on a more frequent basis , whether at the request of clients concerned about their increasing premiums or as an agent ’ s proactive approach to client care .
Regular , periodic “ shopping ” of available markets is one of many benefits independent agents can provide to their clients . With updated information from our clients , we can handle the rating and quoting and provide customers with multiple options from different carriers . As underwriting standards are tightening , agents may not have a choice and are sometimes forced to re-market due to a carrier ’ s non-renewal or uncompetitive pricing on an account . Re-marketing provides an opportunity for an independent agent to show their value to clients , but it also provides ample opportunities for errors & omissions to occur .
Policy language and coverage forms vary from carrier to carrier and a common cause of E & O claims is providing different and lesser coverage when switching a client to a different carrier . Iit is exceptionally difficult to obtain duplicate coverage with a different carrier . As such , it ’ s important that agents are careful when re-marketing clients ’ accounts and ultimately recommending a change of carriers to its clients .
When communicating with clients , agents should not promise to obtain the same policy . It ’ s important and advisable to let a client know you are shopping coverage , but let your client know you will provide quotes and options for similar coverage . Ask your client for updated information to make sure the application is completely upto-date and it reflects the current exposures of your client . Asking for updated information provides a great opportunity to listen to your client and learn about any changes , and it also provides an opening to discuss higher limits or additional coverages that have become more appropriate for an insured to consider . If your client expresses a particular interest in a particular type of coverage or asks for a claim example , you have a great occasion to show your value as an independent agent .
If your insured decides to change carriers it ’ s important to note , discuss , and document coverage changes from carrier to carrier . Be sure to talk about deductibles that may have changed or valuation methods , exclusions , and endorsements . This step is extremely important if you have to move your client from a standard , admitted carrier to a non-admitted carrier . Because a non-admitted carri-
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