Agent E&O Coverage is Plentiful But Exposures Are Growing


Troubled insurers present extra diffi culties for producers, whether it’s prior to or after the coverage is placed.


Certainly agents and brokers have an obligation to take steps mid-term if they found out or should have found out that a carrier has some solvency questions.


Robert Sargent, Mercator Pro


Robert Sargent reports that the market for error and omissions coverage for agents is following the same course as coverage for directors and offi cers: insurers are eager to compete for general business but are growing increasingly leery of riskier exposures.


“One aspect of the professional liability market for insurance agents’ E&O is that it’s highly segmented. While we have many insurers that want to write insurance agents’ E&O, on the order of 30-plus, not all of those markets take the same approach to writing the business,” Sargent said. “There are some that like to write, for example, small traditional retail agents. There are others that like to focus on different aspects, either large risks or specialty organizations.”


In fact, few sectors within agent E&O coverage lack available markets, Sargent said. Producers with broader exposures might include MGAs and some wholesalers, simply because they are exposed to more outlets and regions. Others who specialize in crop, hail coverage and medical professional liability may face higher rates and more stringent terms. “The stakes are higher,” Sargent said.


Claims frequency continues to drop for agent’s E&O writers, although claimants have shown a willingness to pursue incidents that may have occurred several years ago.


Agents are not expected to guarantee solvency of the insurers they represent but are expected to consult a company’s rating or other relevant information that demonstrates the insurer’s ability to meet its obligations. “That coverage is usually triggered by a rating level, usually A- or B+,” Sargent said.


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