Thursday, August 26, 2010

Home Run!

Banner of Babe Ruth at "New" Yankee Stadium, Summer 2010

We've always represented some very strong carriers and products for E&O, Professional Liability, and D&O/EPL. With the emergence of the Technology and Environmental markets we've continued to add products. Over the past year or so we've added some new markets and products and have just done so again in the past couple of weeks. In looking at our market selection and products I think we've hit a home run.

The most recent additions include two carriers. One is a smaller, more agile E&S carrier that is capable of writing various Miscellaneous E&O risks, Architects and Engineers, Social Services and Allied Medical.

The other facility is an AM Best rated A XV carrier that is looking for all manner and types of Miscellaneous E&O including testing labs, spa services, safety consulting, employment agencies, claims adjusters and on and on. They are also non-admitted, but don't let that put you off. Their policy form is cutting edge and gives you a unique advantage over your competitors. The standard unendorsed policy provides the following:
  • defense costs in addition to the limit

  • innocent insured provision

  • crisis management, PR or legal firm costs up to $25K to maintain public confidence in the insured's operation in the event of a covered loss

  • loss of earnings coverage and disciplinary proceedings coverage (sub limits apply)

  • no hammer clause (the most liberal consent to settle* wording available

In addition these and other carriers offer coverage extensions for Intellectual Property coverage, Sexual Abuse and Molestation , Contingent BI/PD and others on selected or qualifying classes.

If your client or prospect is providing medical or healtchare related services, social services, consulting, design, engineering or other professional services we're ready to help. Call us for more information or to discuss your client's business operations and how we can help increase your batting average on both new and renewal business.

*see this post link below for more info on consent to settle/hammer clause, or find the post dated July 15th headed Lawyers Coverage Part III)

Sunday, July 25, 2010

Lawyers Professional Part IV (Coverage cont'd)

Signs help us find our way if we'll pay attention to them. Since not every town is laid out the same, it really helps if know what you're looking for and at least a general idea of where to find it. (This one is in Worthington, OH at a great little shop)

Lawyer's policies are similar to cities and towns, at least in my world, as neither of them are uniform. You really need to read the form (the map) and then if it's still not clear get some "directions" from someone. I wish there was a GPS for E&O policies, but until that happens, here are a few more coverage or wording elements to look for/understand:

Who Is An Insured? The word "Insured" in a lawyer's malpractice policy will/should include the following"...

Named Insured: That should be the entity (or person) named in the declarations. It's just as important that you get the name of the insured correct on this class of business as with any other, and the reasons are the same. Look for coverage to include terms like "firm" and "predecessor firm". In short, the predecessor firm is one that is inactive/no longer providing professional services and either 50% or more of the principals, owners, etc have joined the current insured's firm (your client's firm) or 50% or more of the assets of the predecessor firm are now a part of the named insured's firm.

Insured Persons: A current or previous employee of the Named Insured. This is where you find coverage for partners and principals, and for other staff. If it's "other staff" the wording could further define it as an employee that supports (or supported) an employed lawyer, and this commonly includes clerical and other employees that are not attorneys.

Other terms you will see include independent contractor and "of counsel", as they are also insured under the policy. An attorney who is "of counsel" to another firm in a practical sense is one who has specific expertise or experience that is brought in by a law firm to assist that firm in handling a case. According to Black's Law Dictionary , of counsel is one who is employed by a law firm to assist in the preparation or management of a case, or in its presentation on appeal, AND not a member, partner or officer of the firm employing them.

Insured also usually includes managers, directors, shareholders and the like.

All of the above are normally covered "while in the scope of their duties on behalf of the named insured or predecessor firm" or something similar.

Professional Services: It's usually under this heading, but you need to check the full policy for other services that are covered. The most common - in addition to legal or lawyer services - are as follows:

  • Arbitrator or Mediator
  • Notary Public
  • Lobbyist (some policies will include this and some won't)
  • Law clerk, paralegal, legal secretary/support staff
  • Administrator, conservator, executor, guardian, etc but these services only if they are services typically performed by an attorney
  • Author, speaker
  • Title agent

Let's take a look at that last one. Be careful if you have an attorney or law firm also operating a Title Agency; title agent coverage included in the policy is not the same as title agency coverage. Many lawyer's malpractice carriers will include the title agency on the E&O policy, but most of them will only do so if the title agency is wholly owned by the law firm. The insurance policy will need to be amended by endorsement to include the title agency by name and there will probably be a flat additional premium charged, average is around $500.

While I'm hard at work advocating caution, please look very closely at the wording on the law firm policy vs wording for a stand along title agency policy. Even if coverages were exactly the same (they're not) remember that you're providing one policy so the limit will be shared. As always make sure your customer also knows that.

More to follow...

Thursday, July 15, 2010

Lawyers Professional Part III (Coverage)

This image is "back in the day" worthy. Some of my 2o something acquaintences think back in the day was 2007. Know the band?
Photo courtesy of Elektra/Asylum records

Many years ago agents and carriers used to refer to some of the coverage forms in use as "All Risk" or "Named Perils". The "All Risk" form really didn't cover ALL risks. Many of you are too young to remember all of that "back in the day" stuff, but it's likely that you may still fall into the trap of thinking coverage exists when it really doesn't. Just because you provide a client with a purpose written form that says "Attorneys" or "Architects" on it doesn't mean it's going to cover all of their likely losses. And if you don't read anything else on this subject, know that on these forms you may have to read the exclusions to find coverage, or you may find exclusions in the definitions. Over the next few posts I'll touch on as many coverage areas as possible. Email me if I don't land on the one you want reviewed.

First, most of the lawyer's policies in place today are claims made. There are a few carriers that promote a "package" concept where they include E&O with the GL, and some are written occurrence. I won't take the time here to explain in detail why those forms are probably a bad idea but call me and we'll go through it. The short version is limits are shared or sometimes the professional liability is offered as a sub-limit, coverage isn't as comprehensive as it should be and you really need to pay close attention when you move coverage from a claims made form to an occurrence or vice versa. (If someone has a great "package" E&O for lawyers I'd love to see the wording...)

If you're not up to speed on the terminology and concepts with claims made coverage the best thing to do is review a policy form, use the internet to look up terms, call your favorite E&O broker (I'd recommend TuscanoPro of course), or some combination of all three. If you're not sure how a claims made policy works I'd really encourage you to get that down before you do alot of selling. Once you get the basic concepts it gets down to comparing forms - and we can and will help you with that as well.


Most forms use "pay on behalf of" wording so if someone's making a big deal out of that as a policy feature don't get excited. Every once in awhile you'll see wording that says the carrier will "reimburse" the insured. You really want to avoid reimbursement wording. While a carrier or broker may tell you the carrier will never ask the insured to pay a claim and be reimbursed by the carrier, if it's in the wording I'd be concerned. If they'll endorse the policy wording or replace it with a better form or a different carrier, do that.

Most policies also say the carrier has the right and duty to defend, and that extends even if the claim or suit against your client is false, fraudulent or groundless. These days that's standard wording also, but good to point out if your client has never had coverage previously. Yes, established attorneys and other professionals practice their craft without malpractice insurance, so keep that in mind - you're not just selling a first time policy to those that are new in business.

Last point in this post. You need to understand the workings of the "consent to settle" clause. The consent to settle wording can be called many things, but usually will include the words settle or settlement and consent in some combination. It's called a "Hammer Clause" by most underwriters. The idea is this; the carrier says they won't settle a claim without the insured's consent, but the wording also adds that if the insured doesn't give consent the carrier's liability is limited to what they could have settled for - the amount offered to settle at the time the insured withheld consent. The "hammer" is agree to the settlement the company offers or take the chance you (the insured) will be on the hook for a portion of it later. If your client doesn't give their consent they're gambling that the claim won't exceed the settlement amount.

Some carriers have amended the consent to settle wording to "soften" the hammer. In those policies instead of having 100% of the additional liability (the amount that exceeds the insurance company's agreed upon settlement amount) the insured is responsible for 75% or 50% of the additional settlement costs. Typically it's either wording that's been amended by the carrier or it's not, you probably aren't going to get the carrier to amend their wording on this section if they haven't already done so, but you may be able to negotiate this on larger accounts. Just be aware of the fact that this section isn't one size fits all, there are differences in some carrier's forms. (Whether you know the band pictured or not, don't rely on what you recall was covered from a policy you looked at "back in the day". Wordings really do change...)

Finally, most attorneys (insureds in general) don't think they're going to have a claim, so just because another carrier has a modified or broader consent to settle wording doesn't mean you can't write the account. Like any other class, there are other considerations including your relationship, pricing and other coverages. More of the latter in the next post...

Wednesday, July 7, 2010

Employment Practices Webinar

I'm not one to promote alot of webinar, seminar or similar events, but when I'm made aware of something that might make sense I'll pass it along. IRMI is a pretty solid resource for alot of insurance sales and coverage information. If you're not aware of their resources you may want to save this website and at some point when it's convenient take a look around.

On July 20th IRMI is offering a webinar entitled "Overcoming Objections to Buying Employment Practices Liability Insurance". It's at 1:00 pm and the following link will give you more detailed info.

You'll have to create an account to sign up, but it's pretty easy to do that. The cost of the webinar is $59 per internet connection - as noted on the site "There are no restrictions on how many people view the webinar using this single connection and sign-in (e.g., in a conference room). The webinars will be archived and available for your access up to six months from the date it occurs."

Most of your clients or prospects are aware of EPL but many still haven't purchased, even though pricing has become very competitive and coverage is broader than ever. As always, whether you watch the webinar or not, we're available to talk about EPL exposures, look at existing policies and terms, offer quotes or help in any way we can. We have a number of very good facilities for this coverage, and can include claim examples to help you sell this.

Some of our markets offer EPL on a specialized basis for some uniqure risk exposures, including:
  • Law Firms
  • Restaurants
  • Auto Dealers
  • Medical Facilities
  • Architects & Engineers
  • Accountants

If you're not sure about coverage options, terms or availability, call or email and we'll see if we can help.

Thursday, July 1, 2010

Lawyers Professional Part II (Areas of Practice)

I never realized that some attorneys specialize in dog bites - until one of our dogs bit someone. Who knew that areas of practice can be so specific? For the dog lovers among you, Molly is a pit bull mix on the left and Annie is the lab on the right.

In the previous post I mentioned that you need to know the attorney's areas of practice (AOP) and this post will explore that a little more. Everything that follows is based on actual day to day experience with carriers and accounts I work with, but there may be some slight differences in carrier's and their underwriting depending on geography, etc.

Whether you're writing a policy for one attorney or more than one, you need area of practice information in detail. As far as I know any new business application for Attorney's E&O will have an AOP grid; not so much on renewal apps. Make sure that grid is complete and the percentages for all practice areas total 100.

Some responses on the application will require more info. If any reference to claims a separate claim supplement with details will be needed, and a current loss run will allow your client to be rated as favorably as possible. Most of the time an underwriter is going to apply max debits to the rating process if they know there's been a claim but don't have any info to justify using a low debit, or no debit. Unfortunately many of your clients think the less the carrrier knows the better for your client, and it's usually the the other way around.

As to AOP's that require more info, these are the most common: Real Estate, Plaintiff and/or Estate-Probate-Wills-Trusts. If there's any percentage of work done in these areas you'll need to get additional information from the client. We have a four page form that includes all three of these areas, and if your client only practices in one area that's all they need to complete. Almost every carrier has had some issues with adverse loss experience in these areas, so they need to drill down and obtain more info to determine how to rate the risk. If you need more information to help with your discussion with your client call one of the TuscanoPro underwriters.

Other areas that will require more information include tough classes to write, like Mass Torts/Class Action, SEC, Entertainment (think high profile clients) and Intellectual Property. Most of these have their own supplemental forms that need to be completed. Also don't assume that Intellectual Property means the same to every carrier. Some have a problem writing patent work but not copyright/trademark, some can do up to 5% or 10% of the firm's revenue, some can't write these at all. If it can't be written admitted, Tuscano has some great non-admitted markets to use, so the best advice here is to contact us and talk about the risk.

Monday, June 28, 2010

Lawyer's Professional Part I (qualifying the prospect)

A number of agent's have asked about some of the nuances regarding lawyer's professional and it makes sense to touch on some of the details in a series of posts. If this sparks another question or thought please let me know...

When we're asked if Tuscano can compete on your client's or prospect's malpractice policy, the answer is really no different than on any other class; yes, and it depends. I believe we can compete on anything, but the reality is we can't win on every account. It's a quick phone call or email to us to find out, and to help you and us evaluate your chances here are a couple of diagnostic questions to ask your customer:

  • Which insurance company writes the coverage now? If it's a surplus lines carrier I can almost guarantee we will compete - we have some very competitive options available. If it's an admitted carrier we'll need to know which one and we'll have a pretty good idea how we'll do. We do write with some very good admitted markets.

  • Number of attorneys, limits, deductible and the retroactive date. If you have more than one attorney in the firm, we need the date each attorney joined the firm (individual retro dates). If they have coverage now and they tell you they have "Full" prior acts, it would help to know what that means in terms of years. If it's more than five years that's sufficient enough, less than five see if you can determine exactly how long they've had continuous prior acts coverage in years. It will make a difference when it's rated.

  • Area(s) of practice. If you don't normally work with attorneys, this term may be a little odd but the info is pretty easy to obtain if you have any carrier's new business app in front of you. All apps include a grid that allows your client to show by percentage the categories of law in which they work (called "areas of practice" by attorneys and insurance underwriters). It's impossible to get a valid quote without that info. Look for a separate post that will provide more details on which areas of practice are tough to write, which ones require separate underwriting information, etc. It will help speed up the quote process and will let your client know you understand what you're doing.

  • Coverage. If your client has an expiring policy with a carrier that provides extensive additional coverage, including defense outside the limit (see post labeled "professional liability terms and usage part II"), we need to know that. If we think we're competing with a basic policy form and our pricing is close, then find out it's loaded with additional coverage "bells and whistles" it may well change our opinion. We're always willing to compare coverage for you so if you're not sure about coverage ask your client to give you a copy of the expiring wording and we'll break it down for you. How easy is that!?

  • Claims. Of course. Just knowing basic details about any outstanding or closed claim will help us determine if we can quote admitted carriers or not, which could save us all alot of time, depending on our competition.

That seems like a lot of info, but f your client or prospect will give you an app, even if it's a short form renewal app, a fair amount of the needed info is there. Or we can walk you through this in a phone call of a few minutes and determine if it's worth your time to pursue a prospect.

* first customer to identify the golf course pictured - I'll send you a sleeve or Pro V1 golf balls

Thursday, April 8, 2010

Professional Liability Terms and Usage Part II

CEOL/DOL/DIAL: These are all variations on the same concept; the policy's aggregate limit will not be reduced by claim payments. But it's not that simple, so keep reading.

The abbreviations stand for Claims Expense Outside the Limit, Defense Outside the Limit and Defense In Addition to the Limit. They all share the same concept and meaning, but there are way too many variations, so read the wording and make sure what is listed and defined is clear to you.

Some of the policies that are more current will have this wording as part of the basic policy form. If it's not in the basic form it might be included by endorsement, so if you're doing a comparison make sure you note any additional endorsements or the absence of same.

Some policies will state that the carrier will pay an unlimited amount of claims expense in addition to the policy limit. Some will only provide claims expense equal to the per claim or aggregate limit and others will offer claims expense in addition to the policy aggregate, but only at a sub-limit and as you might guess, that sub-limit could be less than the policy aggregate limit.

Make sure you read the wording closely. It's easy to fall into the trap of making assumption, i.e. start thinking about the word "claims" and assume it means payments/settlements (indemnity), others think attorneys fees (claims expense or defense costs) and still others assume it means both. This just in from the department of redundancy departement: read the wording!

By example, Arch the local architect buys a $500,000 per claim limit with a $500,000 annual aggregate limit. The policy provides defense coverage in addition to the limit of liability (claims expense outside the limit). Arch reports a claim, the carrier chooses to defend and does not settle. The carrier pays $100,000 in claims expense (legal fess primarily) and zero in indemnity, i.e. they pay no damages. Under the policy the $500,000 aggregate limit remains in tact and is not reduced by the claim expense costs/payment.

If on the other hand Arch purchased an architects E&O policy with claims expense included in the limit (defense costs within the limit) then the $100K claim expense payment would reduce the policy limit to $400,000 for the remainder of the policy term.

For other examples you can see that if you increase the claim payment amount and/or reduce the limit of liability that's purchased, deterioration or erosion of the policy limits can potentially be a significant issue. Whatever limit and option you offer your client, make sure they understand how the limits will work in the event of a claim. (And yes, I know, your client believes he or she will never have a claim. I'm still working on THAT blog entry...)

Tuesday, April 6, 2010

"Full" Equals "None"? (Professional Liability Terms and Usage - Part I)

As much as possible when quoting or forwarding policy comparisons or summaries to my customers, I try to avoid using abbreviations or other lingo that may not be readily understood. Sometimes items are included in correspondence that may not be clear, so in the next post or two I'll try to touch on phrases and abbreviations you may run into as you work on future professional liability and E&O accounts.

Past Acts Date: Just another way of saying "retroactive date" or what most people call the "retro date". You will also hear it referred to as the prior acts date. That's one of the critical dates on a claims made policy, and it may or may not be different than the policy effective date. It's the earliest date an error or omission could occur and be covered by the current carrier/policy, and it's either the effective date of the policy (see "RDI") or some date in the past. Some carriers add their own terminology, like Travelers for example uses the term "knowledge date". For them that means the date Traveler's first wrote coverage for that account. What it means is the insured is warranting they are not aware (have no knowledge) of any claims - or incidents that could give rise to claims - that occurred before the "knowledge date".

"Full" Prior Acts: This one indicates that there are no limitations regarding the prior acts date. It's used by some companies when they can see that an insured has had continuous claims made coverage for a period of time (ten years, for example) but the insured has been in business for twenty years. Perhaps they can't really identify the exact date that claims made coverage was first put in place, or once it's past a certain number of years it doesn't really matter to the carrier if a date is shown. Strategically, I think it's used to make it more difficult for competitor carriers to know just how far back prior acts coverage might extend on the current policy! (But that's just me...)

"None": How's that for obscure? You may see Declarations (dec) pages on policies show a prior acts date as "none". Don't be confused into thinking that means they don't have prior acts coverage - if there's no prior acts coverage the "retro" date will show the effective date of the policy, or if it's on a quote the quote form might say "incecption date". Remember, a prior acts date is a limiting or restricting condition of coverage, so "none" as a retro date means the insurance company is not showing a date that limits how far back they'll go to insure past acts. (It's the same as "full". If this doesn't make sense, call me and I'll try another way to explain it...)

RDI: Sometimes a broker will tell you all they can offer is "RDI" when you're looking for coverage to include prior acts. RDI is "retroactive date = inception" and effectively means their is no prior acts coverage provided by this policy. (If an account is quoted RDI, then when you look at the quote document the effective date of the policy and the retro date will be the same date). Just remember if you see or hear "RDI" in regards to prior acts, you need to advise your client they have no prior acts coverage if they choose that quote/policy. And if you're new to claims made or prior acts coverage, it's almost impossible to obtain anything other than RDI on a business that's never carried claims made E&O insurance previously. (I say "almost" to cover my assets because I'm sure someone, somewhere has arranged it, or will in the future)

"Tail" Option: On most policies it's shown as "extended reporting period" (ERP) or sometimes as extended "discovery". If you're talking with others within the professional liability industry, most of us call it "tail" coverage. The rather odd terminology is linked to the fact that the option comes at end of the policy term and if accepted, is added on to the "end" of the policy, like the "pin the tail on the donkey" game. Except hopefully you're not blindfolded while arranging for your client's ERP!

What ERP or tail coverage does is add time onto the end of the policy for claims or incidents to be reported, which oddly enough is why it's easier to remember this as the "extended reporting period option" as opposed to the "tail" option. "Extended reporting period" describes it pretty clearly, while "tail" could mean any number of things, none of which I'm going to explore here!

What ERP does not do is continue or extend the expiring coverage for "new" errors or omissions. If your CPA retires and buys an ERP option, he will have additional time to report claims that may arise as a result of his practice - his previous work in effect. If he then decides to "un-retire" and does nothing about his insurance coverage, his ERP will not protect him from errors, omissions, etc that may happen while functioning at his new job, business, etc.

Tuesday, March 16, 2010

Professional Liability Division Launched

The Tuscano Agency has a 40-year history of helping our agency partners write brokered business. Through the combined focus of great customer service, strong markets, and a focus on relationships, we have become known as one of the best insurance brokers to deal with in our market. This year we are launching a new division called TuscanoPro to focus entirely on professional liability – we are staking our claim that we are every bit as good a broker partner for Professional and E&O as we are for the traditional lines of property and casualty insurance.

TuscanoPro is a unique brokerage outlet focused entirely on filling the insurance needs of your agency’s Professional and E&O customers. Tuscano has always been fortunate to have some of the very best talent in insurance underwriting to work with. With the addition of Tim Hoelle to our staff, we are very confident in our ability to represent you in the Professional Liability marketplace.

The focus of TuscanoPro is exclusively Professional Liability. That means coverage, carriers and products relating to E&O and professional liability, including malpractice. We keep up with form, carrier and technical changes and detail. Our expertise will raise the bar and give you the competitive edge for winning on this business.

TuscanoPro means comprehensive coverage analysis. We can provide key coverage comparisons, talking points and customized summaries on accounts. (I am NOT referring to pre-printed insurance company marketing pieces that show what their policy provides and then leaves the other column blank).

TuscanoPro response time is what others can only talk about. Our R2U service standards already fulfill many expectations for responsiveness; however, the TuscanoPro team is committed to being knowledgeable, available, and responsive – qualities you have only dreamt about in a professional liability brokerage house.

Attached is a list of classes and types of business TuscanoPro will focus on. You will be encouraged to receive best in class service and professionalism and have the confidence to go after prospects and clients professional liability business. The marketplace is competitive and challenging, but new business can be written if you have the proper tools. Allow TuscanoPro to help you write and retain more professional liability business.

Professionally yours,

Rob Tuscano, President