30 Aug What Coverage Was Actually Provided?
I recently noticed this key coverage decision in an August 12 issue of Claims Journal. Without a doubt, it raises some serious questions that agencies would be wise to consider building into their agency procedures. Before I address some of the questions, please take a minute and read this interesting court decision.
To start with, Admiral is an E&S company, so a significant part of my thinking will come from that perspective. I have had a number of the agencies I am honored to work with recently request education sessions for segments of their staff on key E&S issues (don’t hesitate to ask your reviewer if your agency would benefit from that). I have no idea if this issue will develop into an E&O claim, but this is a scenario that increases the odds.
My initial question is, what coverage did the client request? As has been stated numerous times, agencies can be held responsible for securing the coverage the client requested and advise the client accordingly if that is not possible. So, did the client make a specific request for coverage for this exposure?
When the agency went to market for coverage for this exposure, was this the only proposal they were able to receive? Was there a comparison to denote any significant coverage differences if they received multiple proposals from various carriers? If a carrier did not have the exclusion noted in the article, was the client provided a proposal for that carrier?
Was the agency aware of the exclusion if the Admiral proposal was the only one received? This points out the importance of getting specimen forms, especially for some of the exclusions noted in the wholesaler proposal. Agencies should have a procedure to understand and evaluate the coverage proposed.
When the proposal was provided to the client, was the client aware of this key coverage exclusion? Providing the client with a specimen form including the exclusions would allow them to read the form and question the intent of some of the exclusions.
Did the agency pass judgment on the intent of the exclusion? If so, this is a dangerous area. If questioned by the client, the agency should seek a coverage interpretation from the carrier and then pass that on, verbatim, to the client.
At the time of the claim, did the agency pass judgment “approving” that it would be covered? Since 1986 (when the E&O Plus program started), how agencies handle claims has been the #2 cause of E&O claims. In reality, agencies do not have the authority to approve or deny a claim.
I don’t have the answers to these questions, but how would you feel if this issue occurred in your agency?