Documentation is crucial for insurance brokers to protect themselves in the event of errors and omissions because policyholders who have largely failed to obtain business break coverage from their insurance companies eventually turn to them to compensate for their COVID-19-related losses, experts say. .
To date, only a handful of agents and brokers have been mentioned in coverage disputes stemming from COVID-19 claims, but "that number may well increase over time," said Kenneth Fall, chief litigation attorney at Marsh LLC in New York.
He spoke at the Minneapolis-based Professional Liability Underwriting Society's Virtual Annual Conference on Tuesday.
"We clearly see a hardening market," said Lisa Doherty, founder and CEO of Business Partners in Windsor, Connecticut. . "As a national issue, it has become more difficult for policyholders."
There are much stricter guarantees, and insurers issue supplementary exposure applications to determine their COVID-related exposure, she said.
Prices and retention increases are increasing, and insurers are trying to put COVID-related exceptions in policies, which will create exposure for brokers, Doherty says.
Mr. Fall said, "Every time you have a hardening market, you will have a situation where more claims are questioned and denied," and ultimately there will be more E&O requirements against brokers derived from COVID-1
Brokers need to navigate the situation now, he said. "The key will be for brokers to clearly communicate exclusions and other nuances that appear in the policy," and then document their conversations with policyholders, Fall said.
More documentation is critical in a hardening market, agreed James Redeker, claims manager and vice president of damages at Westport Insurance Corp., a Westport, Connecticut-based entity from Swiss Re Ltd. Even identical wordings can be interpreted differently by courts, he said.
"Make sure you document everything," Including situations where policyholders reduce coverage, says session moderator Peter Biging, a partner with Goldberg Segalla LLP in New York, who co-chairs his company's management team.
"Most brokers of any size have a document management system of some kind, and often these systems are set up so that they can take notes on important communications," he said.
The appellant's lawyers will request these notes if they are not in the system, Biging said.
"Look at the whole," he said. Do not get caught up in a specific policy but look at the entire portfolio. He said in one case, with a dispute, that a policyholder who was very price-conscious wrote in connection with another policy, "This costs me a fortune. "I do not want that," said Biging.
"Fight these early COVID-19 allegations," said Redeker. "Do not give the plaintiffs a toe-to-toe to flood the courts with suits. It will be good money."  "It's really early days, so pay attention, be careful" and see the situation, "for this will develop further," said Doherty.
Other experts have also said that the prospects for policyholders who leave business-related disputes against their brokers are hovering over insurance brokers' E&O market.
There are also a whole host of operational issues to consider, Biging said.
Brokers have usually insured in their office "and see them visually sign applications", and that does not happen. former brokers could visit places and "eyeball" situations, and they do not necessarily do so now; and there are issues related to brokers taking up their premium checks.
"There are all these additional issues that may rise as a result of COVID-19, "said Biging.
More insurance and news on risk management about the coronavirus crisis here .