PRODUCT: Agents errors & omissions liability program

COMPANY: Westport Insurance Corporation (admitted) and First Specialty Insurance Corp. (non-admitted)

BEST RATING: A

AVAILABILITY: Big "I" state associations administer the program. For state-specific contacts, visit the Big “I” Professional Liability program online.

FOCUS: The Big “I” agents E&O program is drumming up more business on multiple fronts, attracting a growing number of large agencies as well as clusters and other types of aggregators. According to Mark Wolf, Big “I” vice president of E&O operations, submissions and binders are up by 10% this year over 2013 results, thanks in large part to state associations “doing such a great job selling product to members.” The litigious climate has also contributed to success—as average claims costs rise, “agencies are finding they need higher limits to protect themselves,” Wolf says. To that end, the Big “I”/Swiss Re Corporate Solutions partnership steps up with ample capacity muscle: $25 million per claim and aggregate. Wolf says he knows of no other market that comes close to that figure. “It gives us a significant competitive advantage in serving large agencies,” he explains.

In addition to abundant capacity, Wolf touts the program’s attractive form that provides various coverage enhancements at no additional cost while offering simplified language on contract terms and conditions. For example, the program affords producers protection for first- and third-party cyber liability, including data breaches, viruses and worms, malware and other personal data exposures. Third-party cyber liability sub-limits are $1 million per claim and aggregate. Per-claim and aggregate limits of $2 million for two endorsements—employment practices liability and sales of annuities and other financial products—provides another layer of “value-added” protection, Wolf says, noting simplified wording results in fewer disclaimers and qualifiers that many competitors impose in contract language. As for the contract itself, it does away with the common two-form practice in favor of a single-form approach that enables agents and brokers to customize coverages—thus tailoring contracts to meet specific coverage needs.

Wolf also cites several risk management services that enhance the Big “I” agents E&O program: insureds benefit from a 10% credit by taking a new Big “I”/Swiss Re claims prevention seminar titled “E&O Risk Management: Meeting the Challenge of Change”; expansive loss prevention content on the Big “I” risk management website along with a quarterly newsletter; and the Big “I” Virtual Risk Consultant, an online resource that helps Big “I” members assess their clients’ insurance needs. In addition, the Big “I” and Swiss Re host periodic webinars on various risk management subjects relating to increasing agency E&O exposures, such as flood insurance and certificates of flood insurance.

UNDERWRITING: Westport offers stand-alone insurance agents E&O liability primary policies for wrongful acts arising from rendering professional services. Westport policies automatically present $10,000 per catastrophe and $25,000 aggregate for catastrophe extra expense. Westport’s optional catastrophe extra expense limits run to either $100,000 per catastrophe and $250,000 aggregate or $50,000/$150,000. Westport’s Choice of Defense Counsel endorsement has been in high demand—serving mid-sized and large agencies, it’s particularly attractive to insureds that want to expand their choice of legal counsel beyond Swiss Re’s network of attorneys. Westport policies provide subpoena coverage with $10,000 limits. Aggregate deductibles are standard, but per-claim deductibles that have a premium reduction are also available. Claims-made forms are used. Defense costs are outside policy limits. Punitive damages are covered where insurable. First-dollar defense coverage is standard, but premiums are less when deductibles apply to defense costs.

First Specialty provides the paper for primary E&O liability coverage for surplus lines agents and brokers, program administrators, managing general agencies and agencies that specialize in aviation, wet marine, long-haul trucking or other high-hazard classes. First Specialty’s policy can cover agencies with less than three years’ experience and firms with imperfect claims history. First Specialty limits can reach $5 million per claim and $10 million aggregate, with deductibles beginning at $5,000. First Specialty contracts have defense costs inside policy limits (outside available for qualifying risks). First Specialty excludes punitive damages, doesn’t provide first-dollar defense coverage and delivers excess coverage, with $10 million in limits and attachment points starting at $1 million for various eligible primary E&O carriers. Other primary insurers can be considered on a case-by-case basis.

MINIMUM PREMIUM: Varies by state.

TARGET: Big “I”-member agents and brokers.

COVERAGE TERRITORY: All states.

CONTACT: Mark Wolf, vice president of E&O operations at the Big “I”; 127 South Peyton St, Alexandria, VA 22314; 800-221-7917. Sabrena Sally, senior vice president, corporate solutions, Swiss Re America Holding Corporation; 5739 N. High Street, Worthington, OH 43085; 614-262-9480.

Ron Lent is an IA contributor.