Ending a Client Relationship Without E&O Exposure

• July 22, 2026

By Shirley Zelenski

Have you ever been in a relationship that ended in heartbreak or disappointment, and after it was over, you finally saw the red flags? The same scenario can happen to your agency when you keep a problematic customer.

While one experience is about the heart and the other is about the pocketbook, both relationships require an objective look at what’s happening and a truthful answer to the question of whether it’s still working. For an insurance agent, the bigger question is: Will this relationship put my agency at risk for greater problems down the road?

A problem client is often more than a service inconvenience; they are frequently an early indicator of an errors & omissions claim waiting to happen. When it’s time to part ways, know that your agency can do it, just use the right approach, and that is one that is an act of risk management, self-preservation and continuity of coverage for the client while they’re on the way out.

Here are some potential red flags to watch out for in clients:

• Chronic payment issues, such as missed payments, repeated cancellations or reinstatements and ongoing billing friction.
• Abusive, hostile or threatening behavior toward your team.
• Service demands that exceed what you can reasonably deliver.
• Material misrepresentation or consistently incomplete or inaccurate information that prevents you from properly placing their coverage.
• A breakdown in the advisory relationship, such as ignoring recommendations and then disputing outcomes when things go sideways.

A common objection to firing a client is: “I don’t want to lose revenue, so what’s the worst that can happen?”

But imagine the work it would take to keep finding a market for a daycare center that repeatedly ignored its carriers’ loss control recommendations and had multiple legal violations. With each nonrenewal, an exponential amount of time passes between carrier placements. Your agency may have already discussed the search for replacement coverage with the client, and the latest nonrenewal is clearly documented in writing. Then the worst happens. A tragic death occurs, and your agency is pulled into an emotional lawsuit seeking justice—and your agency has not yet been able to find replacement coverage.

This example is a real-world claim and the severity of it was about as unfortunate for the agency as you can imagine.

Often, the need for disengagement rarely begins with a single incident. Instead, it emerges from a recognizable pattern of behavior, such as the insured’s repeated failure to comply with the law.

Although you may hesitate to step away from difficult accounts out of concern for lost premium, disengagement is ultimately about the proportionality of risk. Accounts that consume a disproportionate time increase the likelihood of errors by putting undue strain on your staff and exposing your agency to far greater costs than the revenue they generate. Addressing misalignment early helps prevent missed deadlines, unmanaged expectations and allegations of failure to advise or procure coverage.

The mechanics of a smooth decoupling depend on the line of business, carrier rules and the regulatory environment. Still, the objectives are universal: Be clear with the client that your agency can no longer adequately meet their needs, and you will work to ensure continuity of coverage.

Some agencies choose to service the policy through its natural expiration and then step away at renewal. An agent may also facilitate an agent of record or broker of record transfer so the client can remain with the same carrier. Assisting with the placement of coverage with a new insurer, when appropriate, is another approach.

It is also important to recognize that disengagement rules and risks differ between personal and commercial lines. Personal lines are typically more heavily regulated, with stricter notice requirements and narrower grounds for nonrenewal, while commercial lines allow greater flexibility but still demand disciplined documentation and careful adherence to non-discrimination standards.

In all cases, agencies should confirm state-specific requirements and carrier expectations before acting. Document the entire process—in particular, your business rationale for disengaging to show that you remained fair, professional and compliant.

When your agency is firing a customer, be aware that there are several pitfalls that can create a gift-wrapped exhibit for opposing counsel, such as creating a coverage emergency by not providing the client with enough notice, overexplaining grievances in writing, and misrepresenting the agency’s authority by implying the agency can cancel or nonrenew the policy.

Also, don’t apply service standards inconsistently across similar clients or continue to service accounts after disengagement. And do not allow your staff to absorb abusive behavior. Instead, address it at the management level.

When disengagement is handled correctly, it should not feel punitive to either party. Instead, it should feel like a managed transition. Expectations are clear, coverage pathways remain intact, and the agency’s documentation reflects thoughtful, consistent decision-making. From a risk management perspective, this approach minimizes confusion and uncertainty—two common drivers behind E&O claims.

If you are disengaging properly, the decision should be explainable in a single sentence, supported by objective documentation, such as:

• “We’re no longer able to meet your service needs.”
• “Your insurance needs may be better served by another agency.”
• “We believe a different agency may be a better fit going forward.”

For Swiss Re policyholders, more helpful examples, including sample letters, are available on the E&O Guardian website.

Just as in any relationship, recognizing the warning signs and having the courage to make a difficult decision can protect you from greater disappointment down the road. In the world of insurance, parting ways with a problematic client isn’t just about letting go—it’s about safeguarding your agency, your team, and your reputation.

By stepping back, evaluating the situation honestly, and taking action when red flags appear, you ensure that your agency’s future remains secure. Sometimes the healthiest choice—for both parties—is to move forward separately, with clarity and professionalism guiding the way.

Shirley Zelenski is senior underwriter at Swiss Re America Holding Corporation.

This article is intended to be used for general informational purposes only and is not to be relied upon or used for any particular purpose. Swiss Re shall not be held responsible in any way for, and specifically disclaims any liability arising out of or in any way connected to, reliance on or use of any of the information contained or referenced in this article. The information contained or referenced in this article is not intended to constitute and should not be considered legal, accounting or professional advice, nor shall it serve as a substitute for the recipient obtaining such advice. The views expressed in this article do not necessarily represent the views of the Swiss Re Group (“Swiss Re”) and/or its subsidiaries and/or management and/or shareholders.