Professional Liability Insurance

Employed Lawyers - Questions Answered

2011-08-26T08:11:00.009-04:00

Mecklenburg County Courthouse, Charlotte NC

Several questions have been asked as a result of the recent post regarding Employed Lawyers. Please note the following...

1. Q: If my attorney prospect has their own practice and works part time as an employed attorney for a corporation (or non-profit), won't the malpractice coverage for the attorney's firm include coverage for work they do for others?

A: No. "Work for others" could loosely be what we call their work for their own clients, or possibly as an "of counsel" for another firm. But while "work for others" is a concept, it's not common language in a lawyer's malpractice policy. In a situation like this start by looking at the definitions of Named Insured and Insured, and check the lawyer's policy for any endorsements that might name a third party. It's unlikely the wording will include a third party, like the attorney's part time employer in this case, as an insured or named insured.

And for those of you thinking what if the situation is reversed, i.e. the attorney is full time in practice and part time working for another entity. The response is the same - the intent of the attorney's private practice policy is not to pick up work they do as an employee for a separate and independent third party employer.

2. Q: What if the attorney is working for a company that has their own professional liability coverage - wouldn't that E&O policy cover the attorney? E&O is E&O, isn't it?

A: No again. If as an example an Engineering firm hires an attorney full time, the E&O policy for the engineering firm will be specifically worded to cover the engineering exposures. There may also be wording on some E&O policies that not only provide a definition of professional services, but they may also have an exclusion for other professional services. The other practical consideration is that many of the companies that write various E&O classes do not write lawyers malpractice, so they wouldn't want to add the attorney's exposure.

Also, even if a carrier writes both attorneys and other E&O, the policy wordings for both are very different, so adding wording for one type of operation to wording for another is never the preferred way to write a policy.

The only proper way to do this to get correct coverage for your client(s) and avoid an E&O exposure for you is to provide the appropriate policy(ies). If you have a risk with an employed lawyer, find an employed lawyer policy for them.

Other questions? Call or email and I'll be happy to answer.

New Lawyer's Professional Product

2011-08-24T21:18:00.011-04:00

Courthouse, Clearwater Florida

We're pleased to share the news that we've added another product to assist our customers in serving their customers.

One of our A.M. Best rated A+ carrier has added coverage for Employed Lawyers. Qualified attorneys can work for entities small or large, public or private, for-profit companies or non profit organizations.

This policy is designed to provide malpractice coverage for corporate counsel (in-house attorneys). Typically these attorneys rely on their employer for coverage, and unfortunately the employer doesn't always consider the exposure until they've been hit with suit papers.

In addition to the protection provided by putting coverage in place, employers with such coverage will likely have an advantage in recruiting corporate counsel over other employers without this important coverage.

Key Coverage Features:

› Broad definition of wrongful act including actual or alleged negligence in rendering or failure to render legal services or personal injury committed by an insured
› Pro bono and moonlighting services covered with no prior approval required

› Insured includes attorneys and staff, spouse or domestic partner
› Attorneys added during the policy period are covered with no prior approval required

Limits to $5 Million

Premiums as low as $1000

Remember, we have great markets for hard to place firms as well.

Tuscano Offering Free E&O CE Classes in PA

2011-08-04T08:36:00.014-04:00

I've developed a CE class on various Errors and Omissions topics that's approved for two hours of CE in PA. The course is designed to help active licensed agency staff, especially those working on sales, service or marketing of accounts, to navigate through the nuances of E&O risks. There's enough info to help someone who's not usually working on these classes to understand the basics, and there's also plenty of information to help those working on E&O exposures on a regular basis.

This might be of interest to you if:

1. your local association is looking for a new CE class to offer, either for a monthly meeting or for your annual Insurance Day

2. you and a few local agencies/friendly competitors want to join forces and have the CE class offered at one of your office locations

3. you have another idea and want to run it past us!

Topics include:

Basic concepts (definitions and examples of "claims made", "prior acts" and "retroactive date", "ERP", etc)
Pros and cons including comparison of key differences between occurrence and claims made and how to handle risks moving from one form to the other
Additional concepts (including claims expense outside the limit, first dollar defense, "Hammer Clause", slit retro or split limit endorsements, "career coverage")
Additional insured, waiver of subrogation, hold harmless and certificates of insurance - what you can expect from a carrier providing professional liability
Key elements to help increase your chances of writing business

Tuscano will foot the bill, so all you or your staff have to do is attend. It's been presented a few times in Greensburg and now we're ready to take it on the road. For additional information or to talk about booking this course, contact Tim Hoelle or Emily Casino at Tuscano. 800-442-8063

Changes

2011-05-16T12:57:00.012-04:00

Being around our first grandchild has made me once again realize how much things can and do change. He's growing fast physically and so are his motor skills. It's awesome to watch. And he's really cute too...

The market is ever changing, and recently we've seen a few of those changes in the area of architects and engineers.

Over time one admitted market has slowly but surely taken themselves out of the mix on most risks in Florida, especially since so much work in Florida involves condos. Another admitted carrier is getting less and less interested in this class and it's being reflected in their rates - upward of course. A third is non-renewing their book on risks with less than $5 MILL in revenue.

In a stroke of great timing or good fortune, or both, our options just got a little broader. In a number of states (unfortunately not in Florida) we've added another new admitted market for Architects and Engineers accounts. That gives us five options now that are admitted (four in Florida), and an even greater number of excellent non-admitted carriers complement that list for risks that don't fit on the admitted side.

Keep in mind that there are a number of ways to write these accounts, especially if your client is being pressed to carry higher limits for a specific project or client, or if they are looking at a short term project involving new exposures. We also have markets for those closely related to this class, including draftsman, engineers and consultants. Minimum premiums on smaller A&E accounts at lower limits can be as low as $1500, though most come in higher than that.

Architects and Engineers: Unique Coverage

2011-04-17T22:59:00.023-04:00

The photo at the right is of Independent Presbyterian Church in Savannah, Georgia. An example of a type of neo classical structure, it was re-built after the previous structure burned in 1889.

In an architects and engineers policy wording, there are a number of coverage sections and elements that are a little different than other professions. If you're aware of the coverages provided and additional options available you may be able to land an account because your competition isn't familiar with coverage, or perhaps isn't able to offer these extensions. It's certainly worth a look.

Not every policy will include all of the following, and some policies may be able to be endorsed to include one or more of these coverages. In no particular order of importance:

ADA, FFA and OSHA supplementary payments. These coverages reference the Americans with Disabilities Act, the Federal Fair Housing Act and the Occupational Safety and Health Act. If an architect or engineer renders services and the result of their design or engineering work violates one or more provisions of the act(s), the insurance company will reimburse the insured's legal fees. This is only for legal fees, not fines or penalties, and it applies when an administrative or regulatory action is brought against the insured. Limits are usually in the $25,000 to $50,000 range, and typically these limits are in addition to the policy limits and the deductible doesn't apply.
Pollution coverage. It may be included, but check the wording as there's no true standard for this. Some policies are "silent" so there's no specific exclusion and no specific coverage wording either. Some will define the coverage they will provide and it will be very specific, and still others will include the coverage but at a lower sub-limit, possibly $250,000.
Innocent Insured coverage. Instead of having the coverage "added" this is a situation where one of the usual policy exclusions does not apply. That exclusion is for dishonest, fraudulent and criminal acts, and will not apply to Insureds who are not involved in the excluded activity, provided they report such acts to the carrier as soon as they are aware of such activity.
Optional Extended Reporting Period (ERP). Every policy should have such a provision to allow the insured to add time to report claims should they decide not to buy coverage going forward. The length of time varies from one to five years, and a few carriers offer unlimited ERP. The longer the term of ERP the more premium your client will pay. This coverage extension is frequently not considered when purchasing a policy, but perhaps should be in the event the principal(s) are considering retirement at some point in the near future. Some policies will include a free ERP option if the insured retires provided they have been insured by the same carrier for a specified period of time, usually not less than three years. Others may also include a limited time of free ERP if the insured is disabled or dies during the policy period. If you're inclined to talk with other clients about life or disability insurance you should be talking with an A&E firm about the same issues.
"Attendance at Proceedings" supplementary payments - this isn't solely found in A&E policies but its worth noting. This coverage will provide additional limits for costs the insured may have to incur as a result of appearing at a hearing or trial or similar event at the request of the insurance company. Amounts per day are $250 and up, and the aggregate during the policy is usually $5,000 to $10,000 but can be higher. Check the policy, but usually these limits are in addition to the policy limits and no deductible applies.
Mediation credit. If a claim is resolved by mediation the policy deductible is reduced by a set percentage, usually 50%, and is usually subject to a maximum reduction, most commonly $25,000.

If you're not sure which additional coverage might be available, check the policy or make sure you ask your broker or underwriter.

Architects & Engineers Insurance: Submissions

2011-04-04T21:06:00.013-04:00

When I was eight years old I thought I wanted to be an architect. I had a set of plastic girders and panels made by Kenner Toy Co, ingeniously called the "Girder and Panel Building Set". I made Cape Canaveral, or what I thought was the Cape. I tore that down and made a store, and then an office building, and who knows what else. As I got older I realized that I probably couldn't keep up with the math; Trig was about as much as I wanted to deal with. And by then I had discovered girls, sports and all manner of other distractions. While I didn't become an architect, I've never lost my fascination with buildings and their design, and I'm happy I can still be involved with this class of business as a broker.

Now that you know what I was thinking when I was 8, here are a few things you may want to think about when you are presented with an opportunity to write a business providing architectural or engineering services:

Revenue is certainly an underwriting consideration, but you will also need to obtain construction values. Annual revenue numbers are pretty obvious, but for construction values occasionally I'll see a submission that either shows "average" values or a "max" value. Unless stated otherwise, what the underwriters are looking for is the annual total value of all of your prospect's construction projects for at least three years, i.e. the "next" 12 months, the recently ended 12 mos and the 12 mos prior to that.

"Design-Build" firms. If your client is also involved in the building process, the carriers will need a breakdown of revenue between "design only" and "design-build" operations. Even if there's a very small percentage of "build", get the info anyway.

New in Business. Just like with any other class, if they're just starting an A&E operation, in addition to the app you'll need resumes for the principals. If they want to include names and descriptions of projects they worked on at a previous firm, that's fine, but don't have them send an electronic portfolio of everything they've done since college. If an underwriter really needs more info to qualify the risk they'll ask for it.

Change in ownership and/or operations. If a new owner takes over you may have a chance to get your foot in the door, especially if something about risk characteristics change. If they're now doing structural engineering and they've never done that before, the current carrier may be forced to non-renew or drastically alter pricing and terms. If they've just been given a contract for a job out of the country, the current carrier may not be willing or able to extend coverage. Find out if anything has changed or is about to change.

Specific Projects. Sometimes an architect or engineer will not have any professional liability (PL) insurance coverage and will be asked to bid on one project that requires evidence of PL coverage. As you would expect you'll need a full app and full details of the work they are going to do regarding this project to be able to arrange coverage.

Specific Client Excess. Similar to "specific project" coverage, but in this case one client of the A&E firm is requiring higher liability limits than the firm currently carries. Details of the project will be needed to underwrite this exposure, including name of client, services being rendered, the primary limit of liability and what carrier is writing that layer. A premium indication will be provided subject to review of the primary policy wording.

Competition/Other Carriers. Find out what carrier is writing the coverage currently. If it's an exclusive program for an association it will be tough to beat their pricing and it may save you some time and energy. If it's a surplus lines carrier you'll obviously want to figure out why (claims, areas of practice, location, etc) and make every effort to obtain terms from an admitted company. I've recently seen a couple of situations where the client of the A&E firm is requiring a minimum AM Best rating, and that may require the client to change carriers.

There are quite a few other considerations, but these are some of the more common ones. Let us know if you need more information or need to discuss a specific situation.

One Risk Not Fitting In?

2011-03-16T22:24:00.025-04:00

At some point everyone finds themselves with a submission that seemingly doesn't fit. You're trying to finalize your clients overall insurance portfolio and you have this one puzzle piece that you just can't easily plug into place. It could be that your best customer gave you a referral with no idea how "non-standard" it is, or an existing client has pending or paid claims in the past year. Or maybe your bosses son-in-law is just now launching a new business venture.

Whatever the scenario, there are a few steps you can take that will speed up the process of getting the risk quoted, and quite possibly increase your chances of getting it quoted competitively. Here are a few issues you may have to contend with:

Losses: Don't wait to be asked for loss runs, provide them. That alone will move the process ahead faster. Most of the time either the agent or the client feel it's going to be worse if the loss runs are presented, especially if they show a loss or two. It's possible providing a loss run will be a problem, but it may also help. How? If the loss is open and "older" (more than 12 months) and the loss reserve remains the same or is reduced that's better than seeing a larger or increasing reserve amount. Also if the loss run from a year ago showed the claim as open and a current loss run has it closed, that's a better position from which to negotiate with a carrier. A closed claim, even if it seems like a high amount, is at least a "known" factor. The concern with a claim with an open reserve is the reserve can always go higher.

If losses have been the problem for your client, another way to potentially help is to get a narrative from the client as to any changes in procedures, staffing or other parts of their operation that have been implemented to prevent similar future losses. In this regard, if there's a story to tell - tell it. If the insurance carrier has free risk management service available, take advantage of it, especially if it can help your client reduce premiums and/or get out of the surplus lines market and back to the admitted market.

New In Business: Standard companies can have a difficult time writing new business operations, but there usually are very good alternative market options available. You can increase your chances of getting the account written with good terms if can provide information regarding qualifications. That would include resume's, special training, prior experience and education.

Operations/Services: You may have a tough time placing an account because the operations are considered high risk. If your client is designing and installing a "system" to prevent bridge piling erosion, it's going to be a tough placement. To optimize your chances of getting the best terms from what will be a limited number of markets, make sure the underwriter has a clear explanation of the services your client is performing. It might be necessary to be sure to list the services they do NOT offer that other similar businesses will offer to make that distinction.

The perception might be that your client is in a high risk occupation, but with proper info it may not be as much of an issue. For example I just worked on a consultant that trained others how to work through the processes to ship hazardous materials. Many carriers can't touch a risk associated with hazardous materials in any way. Other carriers were able to quote the account but only after they understood what the insured did NOT do, i.e. they did not instruct on how to ship or pack the materials, they did classroom instruction for those individuals who checked the shipments and made sure the paperwork was accurate and complete.

Bottom line; when you are thinking about details of an account, when in doubt, include the info. As you know, if you leave most company underwriters with the need to interpret a risk and rate it more conservatively vs more aggressively, most of the time you're going to get a conservative outcome. That means the carrier will rate it higher, restrict limits and/or just flat out decline it.

Take some time to get the pieces in place and you will go a long way to resolving this puzzle.

Title Agents Business, and How To Keep Your Clothes On?

2011-02-28T14:13:00.005-05:00

Really, really good agents can sometimes get in trouble through simple misunderstandings and missed communications. Sometimes that can happen with customers, and sometimes with brokers or carriers. I'm aware of a couple of situations recently that have popped up and need to make you aware so you don't find yourself with your pants (skirt, shorts, etc) around your ankles.

Most title agencies have some escrow exposure, it's just a part of what they do. While I understand that some professionals involved with title work do not have any involvement with escrow, they're in the minority.

At least one carrier has developed an endorsement to be included on the E&O policy issued to title agency businesses. That endorsement includes wording that basically says there's no coverage for ANY escrow transaction. According to a friend of mine on their book, at least two different agencies are about to find out how good their own E&O policy and carrier are, as two different claim scenarios have developed that the insurance carrier is denying on the basis of the endorsement wording.

Fortunately we didn't handle these accounts so I'm not sure which part of the "chain" failed, but I'm well acquainted with the carrier and I'm pretty sure it wasn't them. They provide all wording and endorsements with their quote, so likely either the agent or the broker failed to clearly communicate this limiting wording to their customer. And even if they did, it makes no sense to sell a title agency a policy that doesn't offer coverage for escrow transactions. That's almost like selling a restaurant a policy that excludes cooking.

(Yes, I know some "restaurants" don't cook anything. Don't be distracted by my analogy - since this is a claims made policy, even for those rare cases where the exposure doesn't exist now, if they ever did any escrow work in the past there's no coverage for that either). Now apply that to a title agency that doesn't currently do escrow work but did so in the past and their E&O policy has a 1996 retro date. That's a major problem if there's no escrow coverage now.

If you're not sure about the options available or would simply like to discuss the account(s) you have now, let us know. We're interested in staying fully dressed, just like you.

Have We Got A Great "Combo" For You

2011-02-22T10:26:00.006-05:00

(The combo pictured isn't what we're offering, but if you write enough of this business with us you never know!)

We have a new product that could be very helpful to you, especially if you have a client that needs E&O and GL and your standard market can't provide that option. And even if they can provide the option, you may want to make sure your client knows if the limits are shared or not, and if the E&O coverage is a broad or restricted form.

One of our non-admitted markets has given us the go ahead to offer a combination policy that provides claims made E&O plus occurrence form GL.

The highlights are as follows:

Minimum premiums start at $750
Limits to $5 MILL are available (for qualifying risks)
Carrier is AM Best rated A++ XV
GL per ISO 12-07 edition
Quotes provided from any carriers E&O app

Additional coverage options are being discussed, like Hired and Non-Owned Auto and Employee Benefits Liability. Both would be offered at a sub-limit. We're not there yet but as soon as we get the OK to add those coverages we'll notify you.

Home Run!

2010-08-26T06:53:00.010-04:00

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)

http://tuscanopro.blogspot.com/2010/07/lawyers-professional-part-iii-coverage.html

Lawyers Professional Part IV (Coverage cont'd)

2010-07-25T14:27:00.012-04:00

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 http://www.blackslawdictionary.com/ , 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...

Lawyers Professional Part III (Coverage)

2010-07-15T09:10:00.024-04:00

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.

INSURING AGREEMENT

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...

Employment Practices Webinar

2010-07-07T14:06:00.009-04:00

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 http://www.irmi.com/ 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. http://www.irmi.com/webinars/overcoming-objections-to-buying-epl-insurance.aspx

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.

Lawyers Professional Part II (Areas of Practice)

2010-07-01T08:15:00.020-04:00

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.

Lawyer's Professional Part I (qualifying the prospect)

2010-06-28T11:07:00.024-04:00

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

Professional Liability Terms and Usage Part II

2010-04-08T08:21:00.006-04:00

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...)

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

2010-04-06T13:30:00.021-04:00

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.

Professional Liability Division Launched

2010-03-16T17:01:00.013-04:00

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
robtuscano@tuscano.com