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Agency Analysis
“There are inherent dangers when a company is acquired, not only for the selling company, but for the acquiring company. It is not uncommon for the buyer to require the seller purchase several years of extended reporting coverage. This is because the buyer, when either acquiring the assets or the stock transaction, wants no exposure to any known or unknow liabilities created by activities before the acquisition.
We’ve all seen companies get acquired, with the seller invoking whatever extended reporting coverage they can acquire, sometimes at a significant price. But that is not the only problem, and this is where the approach and analysis become important. Asking the right questions is thus necessary to provide the appropriate financial protection to those involved, with the avoidance of any error and omission claim that might be made against the broker, despite whether they are simply following an “order take” standard or not.”
“laims made insurance policies have existed for a long time. For specialty line insurance policies, such as directors and officers liability, professional liability, cyber liability etc., they are the most common type of policy issued.
They are complex, and depending on the definition of claim, as well as whether or not it’s a claims made and reported form, the policies can be extremely dangerous.
What follows is the first installment of a three-part series on the complexities involved in securing extended reporting coverage in conjunction with claims made policies. I have written numerous articles on claims made trigger problems, prior act problems, prior pending claim exclusions, etc. These only make the problems more dangerous for insureds and for insurance producers. However, and unfortunately, one important aspect of the policy that I’ve somewhat been lax to review in depth is the complexity of the extended reporting provision (ERP) and the ability to buy optional extended reporting period coverage, also known as runoff coverage and/or retirement coverage. Even my own article, The Dangers that May Lurk in All Claims Made Policies, raises extended reporting provisions, but not in depth.”
Brokers are supposed to be independent to represent the insured, rather than the insurer; yet, the law in many states still requires insurers to appoint a broker as an agent actually to transact insurance with the insurer. This dual agency creates well-known conflicts and burdens. We contend that the requirement that insurers appoint agents in…
Brenda Powell Wells holds both a Bachelor of Business Administration and a Ph.D. in Risk Management and Insurance from the University of Georgia. She holds the Chartered Property and Casualty Underwriter (CPCU), Accredited Advisor of Insurance (AAI) and Construction Risk Insurance Specialist (CRIS) designations. She also holds a graduate certificate in Business Analytics from East…
Frederick J. Fisher, J.D., CCP, is the President of Fisher Consulting Group, Inc., and was the Founder of E.L.M. Insurance Brokers, a Wholesale & MGA facility specializing in Professional Liability and Specialty Line risks. He is a Member of the Editorial Board for Agents of America; a Faculty Member of the Claims College, and Member…
David Stegall is the Principal Consultant and Founder of Risk Consulting & Expert Services (RCES) since January 1, 2007 with over 45 years of insurance, reinsurance, bond and risk management industry experience. He is a Chartered Property & Casualty Underwriter, an Associate in Risk Management, an Associate in Reinsurance and a Registered Professional Adjuster. He…
The advantages and disadvantages of joining an Agency Network…and the issues to be considered in selecting a suitable Agency Network.
Marjorie Segale began her career as a commercial insurance broker in Northern California and currently acts as a risk and insurance consultant with more than thirty -five years of experience in this field. She provides a wide variety of risk and insurance consulting services to commercial enterprises, insurance agents, brokers as well as insurance companies,…
