Library of Articles
“Since its creation, “claims made” wording’s use has expanded outside of the “profession” and professional liability realm, finding use in diverse liability coverages. But the roots of “claims made” wording, and its most common use still, is found in covering the exposures created by a “professional’s” activities. As seen by the list of true “professions,” professionals are individuals who provide a service to society which, if done poorly, could cause extreme or irreparable personal or financial harm. … The expansion of claims made policy forms beyond “professions” caused the basic “claims made” concept to diverge and evolve into two distinct forms. One evolutionary branch commenced in professional liability coverages (known also as “errors and omissions” coverages in this series) and the second branch grew out of the financial services industry and the need for directors and officers liability protection, fiduciary liability and employment practices liability (referred throughout this series as “executive liability” coverages). Although both branches attach to the tree at the same point; greatly different “claims made triggers” have resulted. Additionally, coverage terms, conditions and definitions differ between the two branches.”
“Diminishing limits policies create a host of potential problems for insurance company claim departments. As is well known the insurance industry has long been plagued with “nuisance” claims. While in some instances insurance companies make quick settlements of nuisance claims to avoid defense cost expenditures, in others, insurers will attempt to resist such claims to avoid setting a precedent, thereby sending a message to the plaintiff’s bar that nuisance claims will not be honored. Considering that defense costs are deducted from the policy’s aggregate limits, either course of action places an insurance company in a difficult position. … “
As insurance professionals, we are often so busy serving our clients that our writing and publishing take a back seat to our practice. Consistent publication keeps us in the public eye and allows us to rank higher on Google.
The Affinity business is a $100B+ market in the United States with a long history in the life and health arena. Despite that track record it is often misunderstood in the broader market. This paper provides background for any entity interested in getting into that space or already active in it.
For many small to mid-sized companies there is the overriding element of misplaced trust in the broker and a gross misunderstanding of their own duties.
I have not figured out why reinsurance is not fully regulated, as is insurance. I have heard the logic that the parties to the contract are equally sophisticated, and therefor no regulation is necessary. The problem with that logic is that it assumes a premise that is false. Many of the parties do not have equal bargaining power; they are not equally qualified to enter into the transaction and there are no real arms length negotiations. Many small companies spend more on reinsurance each year then they could possibly receive from the sale of the building they occupy.