Insurance agent liability is a professional risk that can be triggered by either the actions or inactions of an agent. The leading cause of claims against insurance agents today is the failure to provide the right coverage to insureds, according to a recent InsuranceJournal.com article.
Continuing education plays a role in agent learning and development, and can potentially mitigate this agent liability risk. Additionally, agents that address and understand client needs may be able to reduce their risk of E&O exposure.
Ways to Mitigate Agent Liability Risk
There are many ways to help mitigate agent liability risk, including:
- Documentation – When it comes to E&O claims, proper documentation, consistent policies and procedures and coverage knowledge can help protect against human error.
- Specialization – One way to safeguard against knowledge-based error is to specialize in a certain coverage area. Specialists understand the market, know the coverages available, and are less likely to make knowledge-based errors.
- Utilize technology – Agency management systems make it easier to verify that policies and procedures are being followed. Additionally, technology can provide assistance if an E&O claim ends up in litigation, since it makes it easier to track files and communications within an agency management system.
Trends in Independent Agent Liability Risks
Looking ahead, it is important to recognize new E&O exposures and risks for independent agents. There has been a growing trend in claims brought against agents for the following reasons:
- Signed application –The increase in carriers’ use of online application processes that do not require an affirmative signature of the applicant prior to binding coverage, has led to an increase in agent E&O claims. It is important for agents to document their file regarding the application information represented by the customer.
- Technology – In the InsuranceJournal.com 2016 Agency E&O survey, respondents listed privacy and cyber-related exposure as areas where they feel most vulnerable to an E&O claim. To help mitigate this risk, agencies may consider a separate cyber coverage policy that also includes breach notification services.
- Social Media – The rise in social media use is creating new E&O exposures. The use of a staff social media policy for social media platforms may offer practical guidance for agents and agencies.
Click on the link to read more about Dispute Avoidance for Insurance Agency E&O Liability.
Watch insurance expert Bill Hager speak on insurance agent liability:
Contact Bill Hager at 561-306-5072 or via email to discuss your case.
Bill Hager’s Experience as an Insurance Expert
Mr. Hager has extensive and substantive experience relating directly to wide range of insurance policies, including interpreting policy language and determining the insurer’s obligations under such policies. He served as a regulator for eight years in five positions:
- Commissioner of Insurance (Iowa);
- First Deputy Commissioner of Insurance;
- Member of the National Association of Insurance Commissioners (NAIC);
- Administrative Law Judge f/k/a Hearing Officer at the Department of Insurance (IA); and
- Assistant Attorney General assigned on a full-time basis to the Department of Insurance.
In these positions, Mr. Hager, along with his staff, approved (or disapproved) of the language of insurance policies used by each of the insurance companies doing business in the state of Iowa. This regulatory action also included the approval of policy application forms. In addition, he regularly served as an Administrative Law Judge (then known as a “Hearing Officer”) in matters relating directly to insurance policies.
While Commissioner, Mr. Hager also served as a member of the National Association of Insurance Commissioners (“NAIC”) and participated as a member of its Executive Committee.
In addition, Hager has served in the following capacities:
- President and Chief Executive Officer of NCCI, a major property casualty insurance entity;
- Elected Member of the Florida House of Representatives with service on the Insurance Committees;
- General Counsel and Chief Lobbyist to the American Academy of Actuaries;
- Attorney in private practice;
Click on the link to read more about Mr. Hager’s insurance expertise.
Material for this article was taken from a collection of industry sources relating to the subject.
In all of the general statements here, see the state law of the controlling jurisdiction. Every case is different and circumstances vary widely depending on the governing state law, policy provisions, and related considerations.
This blog is provided for educational purposes only. It is not intended to provide legal advice or an opinion in regard to any topic discussed. The blog should not be used as a substitute for legal advice from a licensed attorney in your state.