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.

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.

Coverage Update–New Option for Stand Alone Sexual Misconduct Liability

Stadium High School, Tacoma WA, where the high school band director resigned after allegations of inappropriate sexual contact with a student. Photo from WGNTV.COM

The photo above is the one of the first I found simply because it’s a fairly recent event, but unfortunately I could have picked just about any state in the union for headlines about high school or college related sexual misconduct. And a similar sad story can be told concerning healthcare facilities, religious institutions and many, many others. The risk is real and profound, as recent headlines have all too often pointed out.

We’re now offering a new option for stand alone sexual misconduct coverage. This isn’t intended for a small risk, but really fills some possible coverage gaps for mid to large size entities, public and private. And it’s important to note this isn’t an afterthought with sub limits of $50,000 or $100,000. In this day and time a $50,000 limit just isn’t sufficient. Here’s a quick summary:

What Does the Policy Provide? Risk Management Advice and Broad Insurance Coverage for Liability and Costs of Defense Regarding Claims for Sexual Misconduct and Molestation and/or Negligent Hiring and Supervision.

Who’s Covered? Executive Directors, Trustees, Employees, Coaches, Counselors, Clergy and Volunteers.

What’s Included? Negligent Hiring, Employment, Investigation, Supervision, Training or Retention Of, Failure to Report Employees Who Commit Sexual Misconduct/Molestation.

Additional Benefits? Tailored Risk Management, Including Access to a Web Based Risk Management Tool. Employee and Volunteer Training Information. Early Loss Mitigation and Access to a Network of Expert Counsel.

Which Entities Are Targets? Religious Institutions, Educational Institutions, Leisure Services, Social Services and Healthcare Organizations.

Minimum Premium? $10,000 for $1 MILL Limit

Limits Available? Up to $5 MILL, Primary or Excess.

Call or email and ask for more information or an application.

Lawyers Professional Liability: Five Things That Could Make A Risk Hard To Place

Most of us believe we can easily identify a real estate property that’s “distressed”. It’s pretty obvious when looking at a photo or visiting the property in question. It may not be quite so easy to identify a distressed law firm as respects their professional liability insurance.

Insurance companies that underwrite professional liability for attorneys will consider some of not all of the following risk characteristics when classifying an account as distressed, or hard to place:

• CLAIMS – Just because a law firm has had a claim does not necessarily make it hard to place. There may well be standard, admitted markets willing to quote that account. Key elements to consider are the details of the claim, when the claim occurred and the outcome.
• DISCIPLINARY PROCEEEDINGS – An attorney could be subject to fines, license suspension or revocation (disbarment) as a result of a variety of action/lack of action. As with a claim, a disciplinary complaint against an attorney does not automatically disqualify them from the standard insurance market. Repeated offenses probably will cause your prospect or client to seek coverage in the non-standard market.
• SUITS FOR FEES – It’s certainly not illegal or unethical for a firm to bring a legal action against a client that has failed to pay for legal services. The problem is that frequently that results in a counter suit from the client, alleging that the law firm committed malpractice, among other things. While a single suit for fees on an application for insurance may not disqualify an account, expect few if any standard markets to quote a law firm that makes a habit of suing their clients for fees.
• AREAS OF PRACTICE- These are the disciplines or categories in which an attorney or firm works, or practices. Domestic law is an area of practice, as is Taxation, Insurance Defense and Criminal law. Areas of practice considered “distressed” will vary by insurance company, but a few that are consistently going to create problems for standard companies include: Intellectual Property, Securities and Class Action (Mass Torts). You may also find that many carriers are now limiting what they can write for firms that are heavily involved in Real Estate, as well as Copyright, Patent and/or Trademark. Much of this will vary by state, or areas within a state.
• NEW IN PRACTICE WITH ANY OF THE ITEMS MENTIONED ABOVE - An attorney just starting out in their own practice, especially if they’ve just graduated from law school, will have a smaller pool of companies willing to offer professional liability insurance. If the attorney or firm is new and is also dealing with a disciplinary action, claim or other item listed above, it's almost certainly going to be considered a distressed account.

Many of the issues listed here can be risk managed to prevent them from happening to begin with, or minimize the chances of a recurrence. We're happy to give you some ideas along those lines as well.

Questions? Comments? Call, email or try our live chat feature…

Get Into the Habit of asking Questions on E&O Prospects

While I have had a variety of habits, one that I've never claimed is running, especially any great distance. There's a great deal of discipline involved with any training but I think even more so running, especially for long distance events.
Photo of the 2011 Boston Marathon
(John Tlumaki - Boston Globe)

We may not all be runners but we all have behaviors we repeat, and when we do things a certain way it's pretty difficult to change, whether it's adding or deleting behavior or trying to develop completely different behavior. For me it's maintaining an exercise regimen - and I have a "habit" of not being consistent!

Habits impact us in our work as well. If you're not used to writing professional liability coverage you may not be used to obtaining certain information that will speed up the underwriting processs. While it may not become "habit" if you don't see alot of this business, if you keep the following in mind it should help save you some time:

1. Current Carrier Info: If there is current coverage in place, find out what carrier is writing it now, limit, deductible, expiration date and the retroactive date of the current policy. If you can determine the existing premium it will allow us to determine right away if we can be competitive, assuming that's important to you, and it usually is. If we're not sure about exact pricing we can at least give you an idea of minimum or likely premiums.

2. Retroactive Date: I know it's listed in item 1, but I see plenty of submissions without the retroactive (prior acts) date provided. It's almost impossible to provide an accurate quote on most risks without the retro date. Most applications have a place to list the current retro date, but it's frequently missed for some reason. Worse are apps that don't ask, so make sure you ask this question of your client. (If your client/prospect gives you a copy of the dec page the retro date may be listed, but check to be sure)

3. Loss Info: If there's been a claim, most carriers have a claims supplement they'd like completed. This is to provide some detail about what happened, which is usually missing from the loss runs and/or claim question contained on the app itself. It doesn't have to be on a formal supplement, if your client will provide a narrative that's fine also. What's also really helpful is if you can include any steps the insured has taken to eliminate or minimize the likelihood of future, similar claims.

4. Business description: This seems contrary to most people's thought process, but the more info you can provide the better chances of attracting more carriers and better rates. This is especially true with professional liability exposures. A simple example is a risk labeled "business consultant". The pricing and terms will depend on the details. If your client's operations include business "takeovers" and/or turn-around management, rates and marekes would be different than for a business consultant that's training office staff on matters involving customer service. Make sure we have the details.

Contact us today - we're happy to help with whatever issues, questions or accounts you may have.

Architects & Engineers Insurance: Submissions

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.