Professional/E&O Market Challenges

Oglebay Golf Resort, Palmer Course, Wheeling WV

I recently had a chance to play some golf in West Virginia. I'm used to playing on fairly flat ground, and about half of my shots in WV were not on flat ground. As you can see from the photo above, in the background on hole number one there's a ski lift - a good clue that the terrain isn't going to be "easy". It was quite the challenge, to say the least.

Whether it's personal relationships, sports, business or something else, one thing for sure is that over time we will encounter challenges. In the business of insurance, these days a "challenge" is the norm and not the exception. As our company underwriters adjust their appetites based on claim experience, financials or home office directives, we work hard to keep up with what is happening with our markets. Here's a snapshot of some of the things we're seeing:

Architects and Engineers: The companies writing these classes are still very aggressive on pricing for entities with routine operations. Markets are still competing for business, so on the majority of risks there's plenty of options, regarding both pricing and terms. Difficult placements include:

• structural or geotechnical engineers
• firms that do more than a small percentage of design/build
• operations involving oil and gas
• engineering firms that design and manufacture a product or products
• work involving condominiums
• very small revenues combined with any of the characteristics listed above 

Miscellaneous Professional:  The majority of risks that fall into this category are consultants of every flavor, but as you probably know almost any business operation that provides professional services can fall into this category. Most markets like just about every consultant risk that you can present, but here are a few classes that are tougher to write, consulting or otherwise:

• credit repair and/or debt settlement services
• real estate services. That would include title agencies, law firms specializing in real estate practice and mortgage brokers. Also real estate agents that generate a significant portion of their revenue from short sales and foreclosures is still a challenge for many of the admitted markets. And real estate agents or property managers selling or managing a large percentage of their own properties is another difficult risk for most insurers.
• armed security professionals
• financial advisers/financial consultants 

Accountants/CPA/Bookkeepers: This class is extremely competitive for risks that have very routine services. Bookkeepers premiums can be as low as $300. The harder to place accounts typically have one or more of these characteristics:

• heavy audit work, especially public company audit
• SEC related work
• business forecasting/projecting
• business valuations
• financial or investment advisory
• mergers and acquisitions
• management advisory services
• custom software sales/training 

Other issues may make a risk hard to place, including prior claims or incidents, new in business and/or disciplinary proceedings or actions against a licensed professional.  We have the markets and experience to help you work though the scenarios listed here as well as almost any other situation you encounter. For information on other classes or to discuss a risk, call 800-442-8063 or email tim@tuscano.com today.

One Risk Not Fitting In?

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.