Beginnings and Endings, or Not.

Sculpture on the grounds at Columbia University, NYC

I'm not a huge fan of contemporary art, and by comparison my step son is quite the scholar and critic, so I'm trying to be open and learn. As respects the piece in the photo above, I'm drawn in by the geometry and it's complexity. I must admit that I have no idea if there's a beginning and an end, and more than likely if I'd ask the artist they'd ask what I think, or what do I see or something similar. Sigh.

Not being able to clearly identify the beginning and the end is fine in the world of art and I'm sure in many other "places", but it really makes life complicated when professional services are being rendered or offered. Most professionals - and their clients - can tell you with some certainty when a professional relationship began, but all too often there's nothing quite so clear when it comes to the end of the relationship.

Law firms, and some other professionals, use engagement letters when signing up a new client, and they use (or they should use) dis-engagement letters when firing a client, or when the client takes their business elsewhere. Not doing so is simply an open door for misunderstandings, and unfortunately these days that could spell trouble. And trouble in this case is spelled l-a-w-s-u-i-t.

If your clients are providing professional services and not using written contracts they're asking for problems. It may not seem like it has anything to do with their questions about insurance, but if your client is still doing business in a very informal way, especially if they have some assets at risk (and they do), it would be wise to encourage them to be a bit more proactive. And by advising your clients accordingly you will be helping your own agency avoid potential errors and omissions issues.

There's a very good post about this by a law firm called Goldberg Segalla with some case study info provided. Here's the link http://professionalliabilitymatters.com/2013/06/05/the-break-up-knowing-when-the-professional-relationship-is-over/

It would be nice to think that the world still functions as it did "back in the day", but as we know things have changed and not always for the better. If you need some help finding resources, making suggestions to your clients, etc just let me know. I'd love to give you some tools to work with.

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 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)

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...

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.

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