1 Professional Liability Seminar Presented by: CID Insurance Programs, Inc.

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Professional LiabilitySeminar

Presented by:

CID Insurance Programs, Inc.

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KNOWING THE DIFFERENCE

Between

CGLand

Professional LiabilityJ

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CGL vs. Professional Liability

CGLProvides coverage for third-party Bodily

Injury and Property Damage Professional Liability

Covers the Errors and Omissions of professional services rendered

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CGL EXCLUSIONS CGL imposes coverage restrictions

applicable to professional liability exposures. Business owners Liability has a professional service exclusion.

Excludes Bodily Injury and Property Damage to a third party.

Source: CGL and Umbrella Insurance Guide

PROFESSIONAL LIABILITY EXCLUSIONS

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WHAT MAKES THE DIFFERENCE?

Commercial General Liability: Care, Custody & Control

Professional Liability:Standard of Care Created by Professionals

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Occurrence Versus Claims Made Occurrence: “Defined as an accident, including

continuous or repeated exposure to substantially the same general harmful conditions. Injury or damage is held to occur during each policy period during which progressive injury or damage is present.”

Source: Commercial General Liability 1998 CIC MS Claims Made: “A policy providing liability coverage only

if a written claim is made during the policy period or any applicable extended reporting period. For example, a claim made in the current year could be charged against the current policy even if the injury or loss occurred many years in the past. If the policy has a retroactive date, an occurrence prior to the date is not covered.”

Source: Merritt’s Glossary of Insurance Terms, 4th Edition

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MISCELLANEOUS / SPECIFIED ERRORS & OMISSIONS

OPPORTUNITY Endless possibilities; covers the liability arising

out of the fee-based services of hundreds of primary office-based services. Forms are customized by class

U.S. economy primarily service-based and becoming more so

Errors and Omissions coverage often contractually required

Increasing litigiousness of U.S. society

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OPPORTUNITYJust a few of the typical services covered… Answering Service Forensic Investigators Notaries Billing Service Graphic Design Public Relations Bookkeepers Human Resources Consultants Claims Adjusters Consultant Recruiters Court Reporters Management Screening Services Document Destruction Consultant Tax Preparers Employment Agencies Marketing Consultant Training Services

And many, many more…

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EXPOSURES Negligence-based Typically primarily economic in nature,

not based on bodily injury or property damage

Paperwork/administrative error Fund-handling errors

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EXPOSURES

Vary greatly according to class Dependent upon services. For example, do

they… Provide money-handling services? Directly manage their clients’ businesses or parts

thereof? Only provide recommendations as a third party

consultant? Provide engineering or construction related

services?

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EXPOSURES Depends on accepted professional standard of care for

the class. “Reasonable person” vs. “Professional” Errors can range from administrative/paperwork errors

to general negligence in performance Defenses

Statute of Limitations Assumption of Risk Failure to disclose information or follow professional advice Contributory or Comparative Negligence Waiver/Release

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LOSS EXAMPLES A Management Consultant specializing in distribution

efficiency is hired to reduce the cost of distribution for a retail baked goods company. He advises the company to concentrate on baking and packaging, sell their trucking unit, contract with a trucking company specializing in food distribution and cut their distribution to a 500 mile radius. He works closely with the company to complete the changes by June 30th, the end of their fiscal year. Trucking companies demand more money for their service than first anticipated due to rising gasoline prices and extended negotiations delay the distribution of the company’s flagship product, their Independence Day themed cupcakes, which do not arrive in supermarkets in time for the holiday. A rival company’s similar product capitalizes and thereafter dominates the market in that region. The management consultant is sued for negligence and $250,000 in damages.

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LOSS EXAMPLES Sara has finally saved enough money to put a

down payment on a house. She goes to QRS Loans, a local Mortgage Broker, and meets with Len to discuss mortgage options. She finally agrees to a loan at 5.5% APR. Len tells her he will be in touch with her in a few days to finalize the paperwork. Sara learns that Len neglected to complete the needed paperwork and has lost the 5.5% rate. Sara is closing on her new house the next day and is forced to use a 6.5% rate. Sara sues QRS for the $25,000 difference in project payments over the life of the loan due to the difference in loan rates.

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LOSS EXAMPLES BCD Insurance, a writer of homeowner’s insurance,

hires Bob as an independent Claims Adjuster. Bob is entrusted with $5,000 in settlement authority. One day, Bob is called to a house which has had its roof damaged by a hailstorm. After inspecting the damaged roof, Bob offers $15,000 to settle the claim. BCD sues Bob for exceeding his settlement authority.

John has been contacted at work by Alan, an executive Recruiter. Alan tells John there is a position at another company offering a higher salary and better benefits and that John would be perfect for the job. John interviews with the other company, is offered the position, and after quitting his current position, accepts the job. He later finds that the job involves much longer hours and does not offer any opportunity for advancement. John brings suit against Alan for misrepresenting the position.

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UNDERWRITING CONSIDERATIONS

Primarily based on underwriting judgment versus manual or filed rates

Premiums developed based in underwriter’s own company claim data and experience

Base rate generally derived by annual revenue of organization, but may also be based on number of professionals at the firm

Years in operation/Applicants experience in their field

Claims experience : frequency vs. severity

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Membership in Associations Workload to staff Client type Use of independent contractors What does client see as the E&O exposure? Does the description of services described on Website

differ from the application? Is the applicant making any guarantees on the

Website? The internet is a valuable research tool to better

understand Miscellaneous exposures

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POLICY & COVERAGE FEATURES

Defense costs: inside or outside the limit? Personal Injury coverage? Coverage for claims arising out of the actions

of independent contractors? Ability to package coverage, offering General

Liability and/or Property in conjunction with the Professional?

Admitted or non-admitted basis?

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TECHNOLOGY ERRORS AND OMISSIONS

OPPORTUNITYRadio took 30 years to reach 50 million

AmericansTelevision took 13 years to reach 50 million Internet- Lightening speed and accelerating-

reached 100 million Americans in only 6 years.

Today’s computer chips are over 20,000 times more powerful than those introduced by Intel in the 1970s.

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OPPPORTUNITY

New methods of conducting business utilizing the latest technologies has led to increased interconnectivity

Case law is limited, as are guidelines and regulations

Overwhelmed/uninformed patent office Globalization of economic enterprise Outdated insurance contract wording

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OPPORTUNITY Nearly $190 billion in Revenue

Generated Represents 1.8% of the U.S.’s total GDP

As compared to: Banking = $155 billion Telephone = $191 billion Legal = $175 billion

The industry is EXPLODING!Source = National Association of Computer Consulting Businesses

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OPPORTUNITY

Increased number of middle market technology risks.

Exposures still emerging (i.e. Application Service Providers).

Predicted to be one of the fastest growing areas of Professional Liability.

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TECHNOLOGY UNDERWRITING Rating:

Application Website Clients/Vendors Contracts Security/Vulnerability Assessments?

Challenges: This is a dynamic industry. Insurers must adapt to changing market conditions and emerging technology quickly. How do underwriters provide adequate coverage at the right premium?

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TECHNOLOGY POLICY & COVERAGE FEATURES

Coverage Issues Defense costs outside the limit of liability Intellectual Property

Copyright, trademark, trade dress Unauthorized Access/Hacking Malicious Code/Virus Liability Personal Injury/Defamation Packaging with General Liability & Property Insurance

Blending 1st party and 3rd party coverage's

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TECHNOLOGY POLICY & COVERAGE FEATURES

Technology Professional Liability Buyers: Buyer #1

Many companies are contractually requiring their IT consultants to obtain professional liability coverage prior to beginning work

This buyer is more concerned with getting a competitively priced policy as quickly as possible

Buyer #2 IT company understands that their products and

services create unique exposures This company is very conscious of coverage & carrier

stability competitive pricing

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TECHNOLOGY EXPOSURES The Tech Exposures:

The fastest changing area of liability today is cyberspace liability. The rapid explosion of persons getting on the Internet in the past few years has spurned the interest of businesses that are interested in promoting and marketing their products and services over the Internet.

This has lead to the expansion of technology service providers that enable businesses to utilize technology to enhance their business operations.

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TECHNOLOGY EXPOSURESExposures faced by these

consultants and their clients:

Media Exposures

Intellectual Privacy Exposures

Network Security Exposures

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Media Exposures Means any form of defamation or tort

related to: Infringement of copyright (including software

copyright), trademark, trade name, slogan, or service name.

Allegations of libel, slander, breach of privacy, product disparagement, trade infringement of copyright, trademark, or negligence regarding the content of any media communication.

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TECHNOLOGY PROFESSIONAL LOSS EXAMPLES

Breach of Client Contract Insured allegedly failed to pay for infomercial

timeslotsClaimant alleges consequential damages for

expenses incurred to locate replacement clients to run in those timeslots

Loss Reserved at $50,000

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Intellectual Privacy Exposures Claims alleging infringement of copyright, title,

slogan, logo, trademark, trade name, or trade dress arising out of professional services.

Breach of confidence or infringement of privacy

Misuse of any information, which is either confidential or subject to restricted use

Mishandling of personal information

A claim alleging a violation of an Intellectual Property can wreak havoc on a company’s finances. Legal fees are very expensive

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Unauthorized use of proprietary information, trademark, slogan, trade name Insured provides the education community with an

operating platform that will integrate all data in a school district into a single, powerful, analytical solution

The claimant (A competitor) alleges copyright infringement in regards to data warehouse and computer program services.

The claimant seeks compensatory damages in excess of $5,000,000 temporary and permanent injunctive relief.

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Network Security Exposures

Transmission of malicious code (I.e. computer virus)

Security breach of your network by a hacker, or unauthorized access to, use of, or tampering with data or proprietary systems.

Theft of information and property via the web

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Systems Installation Error Claimant was a long time client who typically had

trouble paying bills on time. Insured offered hardware that would better suit claimant’s needs but claimant opted for cheaper less capable hardware

Of course the hardware didn’t work as well as the better hardware and the claimant refused to pay insured $10,500, of which $8000 was for the actual cost of the hardware.

Insured sued to collect the money after claimant told insured they wouldn’t pay.

Claimant counter-claimed alleging the insured’s installation of the equipment was improper and that they had to hire another consultant to fix it.

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Improper Systems Design Insured’s allegedly improper design of high-speed data

communication system. Insured was retained to design telephone and data cabling infrastructure for a hotel.

After insured’s technician installed as per his design, insured was notified by company that was handling the telephone installation that insured’s design was for a one-line system that required 2 wires at every station jack.

Claimant’s systems should have been a two-line system which requires 4 wires at every station jack, so there is repair work to be done which may delay the opening of the hotel (potential loss of revenues claim).

Loss Reserved at $20,000

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EMERGING LEGAL DEVELOPMENTS

June 27, 2005 P2P Loses – Supreme Court Rules Against File Sharing

This morning, the Supreme Court announced their ruling on the landmark P2P (peer-to-peer) file sharing case, MGM v. Grokster. In short, the Supreme Court has ruled unanimously against Grokster et al. in the landmark copyright cases, citing what they call “affirmative steps to foster infringement” on the part of the P2P software companies.

May 18, 2005 (COMPUTERWORLD) – Electronic account records for some

500,000 banking customers at four different banks were allegedly stolen and sold to collection agencies in a data-theft case that has so far led to criminal charges against nine people, including seven former bank employees

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MARKETING

Over 100,000 qualified middle-market technology business leads nationwide

Tech Associations – Networking Tech Incubators – Great source of

prospects One Relationship = Hundreds of

Companies

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PROPERTY MANAGERS PROFESSIONAL LIABILITY:

OPPORTUNITY The 2004-2005 US Department of Labor Occupational

Outlook Handbook stated that there are almost 300,000 Property, Real Estate and Community Association Managers

Over 70,000 Property Managers belong to one of the five major trade associations California Association of Community Managers National Association of Residential Property Managers Community Association Institute Building Owners and Managers Association International Council of Shopping Centers

There are regional chapters of these associations in almost every state. A

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PROPERTY MANAGERS PROFESSIONAL LIABILITY:

OPPORTUNITY Only 10% of Property Managers currently

carry Professional Liability coverage If you call sell a Property Manager Professional

Liability, which their current insurance professional may not be addressing, you may get a shot at the General Liability or Property coverages

There are Property Managers for every type of property: Apartments, Condo/Homeowner Associations, Vacation Properties, Office, Retail, Industrial, Self Storage, Medical Facility

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PROPERTY MANAGERS PROFESSIONAL LIABILITY: EXPOSURES

A Professional Liability Claim is more likely to devastate a Property Managers business than a General Liability or Property claim

Professional Services performed by a Property Manager Locate and Screen Tenants Credit and Background Checks Collection and Disbursement of Rents Administering Late Notices and Collecting Fees Repair and Maintenance Upkeep and Inspection of Property Financial Reporting to the Owner

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PROPERTY MANAGERS PROFESSIONAL LIABILITY: EXPOSURES

Discrimination Over half of all Discrimination claims are made

against Property Managers* All Property Managers have this exposure regardless

of the type of property they are managing. There has been an increase in Discrimination claims

against Community Association and Retail Managers Employment Practices Liability Personally Owned Property Real Estate and Appraisal Exposure

Source: 2005 Fair Housing Trends Report

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PROPERTY MANAGERS PROFESSIONAL LIABILITY: LOSS EXAMPLES

Failure to Maintain Property Diminished Value of Managed Property Not Maintaining Property Percentages in

Protected Class Housing Discrimination Against Prospective Tenants Discrimination in Application of Community

Bylaws Employment Practices Liability

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PROPERTY MANAGERS PROFESSIONAL LIABILITY: UNDERWRITING CONSIDERATIONS

Experience Type of Property Managed Construction/Development vs. Tenant

Improvements/ Build Outs Setting Up REIT’s High Value Properties on Residential

Properties HUD or Specialty Class Housing Disciplinary Actions or Claims History

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PROPERTY MANAGERS PROFESSIONAL LIABILITY: POLICY COVERAGES AND

FEATURES Type of Policies available Defense Costs Outside the Limit Internet Coverage Personally Owned Property Coverage Real Estate and Appraisal Activity Disciplinary Action Coverage

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EMPLOYMENT PRACTICES LIABILITYOPPORTUNITYDid you know … An employer is more likely to have an EPL Claim than a

General Liability or Property loss. Fewer than 25% of employers currently carry EPL. There are over 23 million small businesses in the US

with under 500 employees and not publicly traded (Source: www.sba.gov)

Three out of five employers are sued by former employees every year (Source: Society of Human Resource Managers)

Insureds need to know that their coverage was taken away by CG 21 47 Employment Practices Liability Exclusion. The sum of the above points equals a $2 Billion-plus market

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EXPOSURES - FEDERAL LAWS

Early 1900s- Safety Standards and Child Labor

Equal Pay Act of 1963 (EPA) Title VII to the Civil Rights Act of 1964 Executive Order 11246 of 1965

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EXPOSURES - FEDERAL LAWS Age Discrimination in Employment Act of 1967

(ADEA) Prohibits employment discrimination of persons over 40 years

old, whether current employees or applicants. Applies to employers with 20 or more employees.

May 2005: The U.S. Supreme Court held that employees protected by the ADEA can sue their employer for age discrimination if a practice, policy or employment criterion has a disproportionate adverse impact on older workers, even if the employer did not adopt the practice or policy with an intent to discriminate. Can be more restrictive on employees in certain states. Example: The NJ State Supreme Court ruled that an employee

above the age of 18 years old fell into the protected class.

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EXPOSURES - FEDERAL LAWS Americans with Disabilities Act of 1990 (ADA)

Applies to employers with 15 or more employees. In the first four years after this legislation was introduced,

ADA claims rose from 999 to 13,470. Only 6% of claims brought by Blind and Deaf. 85% of claims brought by people already in workforce. 40% brought over Carpal Tunnel Syndrome/Depression.

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EXPSOURES - FEDERAL LAWS

The BIG ONE for Employment Practices insurers …

Civil Rights Act of 1991Amended Title VII Allows for …

a jury trial punitive damages damages for emotional distress

In 1992, the first stand-alone EPL policies hit the marketplace.

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EXPOSURES - FEDERAL LAWS Family and Medical Leave Act of 1993

Applies to employers with 50 or more employees within a 75 mile radius.

Employers must grant an eligible employee up to a total of 12 workweeks of unpaid leave during any 12-month period for any of the following reasons:

Birth and care of a newborn child Placement with the employee of a child through adoption or

foster care To care for an immediate family member with a serious

health condition To take medical leave when the employee is unable to work

due to a serious health condition.

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EEOC INVESTIGATIONS What An Employer Should Know

The investigation …average processing time is 182 days Submit a statement of position Respond to a request for information

Personnel files of the Charging Party and other employees Personnel policies Other relevant information

Permit an onsite visit. Can speed the fact finding process and lead to quicker resolutions.

Provide contact information for or have employees available for witness interviews

Employer can be present during interviews with management personnel

With non-management personnel, the investigator can interview without the employer’s presence or permission

Source: EEOC.gov

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EEOC INVESTIGATIONS What An Employer Should Know (cont’d)

Once the investigator has completed the investigation, the EEOC will make a determination on the merits of the charge.

REASONABLE CAUSE “Letter of Determination” – reason to believe discrimination has

occurred Invites both parties to join the agency in seeking to resolve the charge

through an informal process called “conciliation” “Notice of Right to Sue” – when conciliation fails, the EEOC can file a

lawsuit in Federal court or allow the Charging Party to file his/her own suit within 90 days from the date of receipt.

NO REASONABLE CAUSE “Dismissal and Notice of Rights” letter

Charging Party has the right to file a lawsuit in federal court within 90 days from the date of receipt.

Employees are receiving “right to sue letters” without an EEOC hearing due to the overwhelming number of cases.

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EPL CLAIM TRENDS Over 40% of EPL claims are brought against private

employers with under 100 employees (Source: SHRM) Most litigious states: CA, NJ, IL, TX, FL and NY. (Source:

Insurance Journal) Employment practices liability claims represent 30% of all civil

litigation in the United States today. (Source: Bickmore Risk Services)

550 EPL lawsuits are filed every day (Source: Insurance Journal)

20% of winning plaintiffs in EPL cases are awarded damages averaging just under $3 million. (Source: www,fmins.com)

The average cost to defend an EPL claim is $150,000. (Source: Insurance Journal)

Probability of plantiff recovery 1997 - 2003 Average of all allegations = 63%

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EPL CLAIM TRENDS Sexual Harassment

In 2004, the EEOC received 13,136 charges of sexual harassment.

Surveys in the private sector find over 40% of women experience some sort of work related sexual harassment and over 15% of men

15.1% of those charges were filed by males (Source: EEOC.gov)

Discrimination (race, pregnancy, age, religion, disability, equal pay, sex-based and national origin) In 2004, the EEOC received 79,432 charges of discrimination. 10% of all awards in cases involving discrimination and wrongful

termination are in excess of $1 million dollars. Age, disability and retaliation claims on the increase.

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LOSS EXAMPLES

CYBERSPACE TECHNOLOGY The Cyberspace Balance

The digital revolution is challenging employers to find ways to maximize workplace productivity and minimize improper, inappropriate, or illegal employee conduct without unlawfully infringing on employee privacy.

Blakey v. Continental Airlines On June 1, 2000, the New Jersey Supreme Court ruled that

e-mail postings by employees on an Internet bulletin board may constitute workplace harassment for which an employer can be liable if it fails to remedy the problem.

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LOSS EXAMPLES Large EPL Claim Awards

Miller Brewing Company (1997) - $26 million Wrongful Termination Award over “Seinfeld Episode Joke.”

First State Bank in Nebraska (2003) - $1.56 million for wrongful termination

Laboratory Corp. of America (2003) - $2.15 million for religious discrimination after birth of child

St. Mary’s Hospital in Michigan (2003) - $2.18 million for wrongful termination and not following the policy on layoffs

Abercrombie & Fitch (2004) - $40 million race, national origin and gender discrimination class action

Morgan Stanley (2005) - $54 million gender discrimination individual and class action

Walmart (pending) – class action for gender discrimination – potential in the BILLION$.

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Type of Organization Employer Size Claim History Pay Distribution Past and Future Turnover Layoffs/ Reduction in Workforce Location Prior Acts Coverage Employment Practices and Policies

Anti-Harassment and Anti-Discrimination Guidelines as a minimum

Questions asked on the application for employment Employment-at-Will and Contract Disclaimers in the handbook

and on the application.

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EPL POLICY & COVERAGE FEATURES

Covered Perils Discrimination

Sexual Harassment Wrongful Termination Retaliation Expanded Definitions of Coverage generally all revolve around

these three perils “Failure to Promote”, “Failure to Hire”, “Negligent Supervision”

Covered Parties Company Past, present and prospective directors, officers and employees

Coverage Issues Defense Costs Outside the Limit of Liability Third Party Discrimination and Sexual Harassment Internet/Email Coverage Full Prior Acts coverage v. Retroactive Date Punitive Damages A

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Employment-related: Misrepresentation Defamation Invasion of privacy Negligent evaluation Wrongful discipline Wrongful deprivation of opportunity Wrongful infliction of emotional distress Breach of employment contract Wrongful termination or demotion Failure or refusal to hire or promote Negligent retention Discrimination Harassment Retaliation

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Written demand An oral threat leads to a “notice of circumstance”

Demand for monetary damages Civil proceedings Arbitration proceedings but not any labor or grievance

arbitration under a collective bargaining agreement Administrative or regulatory proceedings with the

EEOC or similar agency Office of Federal Contract Compliance Programs

(OFCCP) – audit, Notice of Violation, Order to Show Cause

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IS SELLING JUST EPL INSURANCE ENOUGH?

The Emergence of Employment Help Lines And Free (800) Numbers Small Employers do not have Human Resource

Department or Legal Department to help answer any Employment Issues/Laws.

Example: Employee wants to go to Romania to adopt a child.

Is this Employee allowed time off under the Family Medical Leave Act?

When selling EPL, you need to communicate you are offering more than just insurance.

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NON PROFIT DIRECTORS & OFFICERS LIABILITY

OPPORTUNITY There are over 1.6 Million Non Profit organizations in

the United States, with 70,000 new entities filing every year.

Over 400,000 Social Service Agencies Almost 500,000 Membership Organizations

The total annual revenue of the Non Profit sector exceeds $700M.

There are tremendous opportunities among Non Profit Organizations. Generally, these accounts are easy to place, maintain, and renew.

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EXPOSURES Duties owed by a Director or Officer

Directors and officers are subject to three basic duties in performing their responsibilities:

Duty of Diligence: must act with the care that a reasonably prudent person in a similar position would use under similar circumstances, in good faith, and in what theybelieve to be in the best interest of the organization

Duty of Loyalty: refrain from engaging in personalactivities, which would injure or take advantage of theorganization. No room for conflict between one’s corporate duty and self interests.

Duty of Obedience: required to perform theirduties according to the statutes and the terms of theArticles of incorporation or By-laws.

Business Judgment Rule: objective review of the quality of the board’s decision

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EXPOSURESMyths About Immunity

30 – 40 years ago, Non-Profits did benefit from charitable immunity doctrines

Courts held non-profits immune from tort actions General belief: resources/funds should benefit

society, not pay for injuries Most states have now abolished such doctrines Non-profits are now held responsible for their

actions

Source: eriskcenter.org

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EXPOSURES Immunity did not prevent an organization from

being sued and the resulting cost of defense Immunity protection typically applied to

volunteers, not to paid employees or the organization itself

There was no immunity for the Entity itself

The Personal Assets of the Directors and/or Officers are at risk!!

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LOSS EXAMPLESNON PROFIT ORGANIZATION

Example: A donor made a large contribution to a non-profit. The funds were to be used primarily to aid impoverished children with educational and health care needs. Instead, the non-profit through its executive director and board of trustees, decide that the non-profit needed to expand the building and committed a portion of the donation to the building fund. The donor filed suit, alleging misappropriation of funds. The damages included return of the full contribution plus interest. As some of the money was already spent, the non-profit would be financially unable to return the entire donation.

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LOSS EXAMPLESNON PROFIT ORGANIZATIONS

Average cost of defending a Non Profit Claim closed by litigation: $150,000

Employment Practices exposure including wrongful termination, harassment and discrimination.

Various D&O exposures including failure to supervise, misappropriation of funds

Example: Trustees of a charitable organization sold an old building used to house the poor and invested in a newer, better building. They were sued for wasting assets of the Trust.

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Class of Business Mutual Benefit (examples: country club, trade

association) Public Benefit (examples: social service agencies) Religious Organizations (examples: churches,

temples, synagogues) Nature of Operations Number of Employees HR/Employment Procedures in Place Financial Review Claims History

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Separate Limit of Liability for Employment Practices

Defense Costs Outside the Limit of Liability Definition of Insured – Does it include

employees, volunteers and committee members? Full Prior Acts Coverage Duty to Defend vs. Pay on Behalf of Outside Directorship Liability

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POLICY & COVERAGE FEATURES OCCURRENCE VS. CLAIMS MADE

Unlimited Extended Reporting Period For Former Directors And OfficersAdvantage of an Occurrence Policy without

having to purchase tail coverage.Former Directors and Officers will always be

covered for the time they served on the board.Protects former Directors and Officers against

future cancellation or non-renewal.

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Fiduciary Liability Endorsement (401K)ERISA Claims are excluded in policy wording.Employment Benefits Liability coverage

available on most General Liability policies.Personal assets of Fiduciaries are at risk.

Third Party Coverage Harassment Discrimination

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ADDITIONAL OPPORTUNITIES There are over 275,000 Community

Associations throughout the United States More than 54 million Americans live in

association-governed communities Community associations have become

increasingly popular They help protect home values Help meet increased demand for privatization of

services as public officials off-load services that were traditionally provided by government, e.g. trash pickup, snow removal, landscaping, street lighting and street and sidewalk maintenance.

Offer a real sense of community, and important contribution in an increasingly transient society

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COMMUNITY ASSOCIATION PROGRAM

Does Your Policy Includes The Following Coverages?Automatic Coverage for the Management

Company Breach of Contract CoverageNo exclusions for Libel, Slander, DefamationDefense Outside the Limits of LiabilityUnlimited Extended Reporting Period Non-Monetary Coverage

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PACKAGING PROFESSIONAL LIABILITY

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Benefits Of Packaging Property and Casualty with Professional

Liability A. Business Advantages

Underwriting and policy issuance efficiencies One quote – quicker response One binder to process Only one underwriter for all lines One policy – all current dates One endorsement request or claim notice

One stop shopping – ease for insured, especially for contract driven small businesses and consultants

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Liability – Cont’d Easier to premium finance Small accounts become a more stable

premium source and a more profitable book of business

Higher renewal retention

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Liability – Cont’d B. Coverage Advantages

All coverage with one carrier – quicker determination of coverage position

Eliminates carrier “finger pointing” in the event of a claim

Properly address the coverage gap for bodily injury claims due to professional services

Offer needed specialty coverage including Liquor Liability and Special Events

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How to properly address the coverage gap for bodily injury claims due to professional services

1.Why Is Contingent Bodily Injury Not The Answer? Claims Made vs. Occurrence trigger – this is still a bodily injury

exposure, would you sell a claims made General Liability form? Erodes the professional limit of liability – Contingent Bodily Injury

shares the same limit with the Professional coverage, this is even more a concern if the defense coverage is included in the limit of liability

Does the definition of Bodily Injury include mental anguish and emotional distress?

Offer a Product that Correctly Addresses The Bodily Injury Gap!!

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How to properly address the coverage gap for bodily injury claims due to professional services – cont’d

2. Why a true Professional Office Package is the solution: Coverage for Bodily Injury due to professional services is added

to the General Liability coverage form Uses an occurrence trigger like all other Bodily Injury exposures Does not erode the Professional Liability coverage limit Offers direct coverage for Bodily Injury due to Professional

Services that the insured can see on the quote, binder, and policy

Includes mental anguish and emotional distress as Bodily Injury

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Opportunities Include: Community Associations

Condominiums Homeowners Associations Cooperatives Mobile Home Parks Townhouses Office Parks

Non-Profit Organizations Trade Associations Foundations Chambers of Commerce Counseling & Referral Services

Technology Risks Software & Web Developments Training & Education Programmers Database Administration Help Desk Graphic Design

Miscellaneous/Specified Professionals Over 50 types, including management, marketing, Human Resources, Public Relations, Consultants.

Also includes Claims Adjusters, Mortgage Brokers & Employment Firms.

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MARKETING PROFESSIONAL LIABILITY

Take advantage of untapped opportunities.

Be proactive! The internet Cross-sell Contact state associations and

membership groups

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1 Professional Liability Seminar Presented by: CID Insurance Programs, Inc.

Documents

Transcript of 1 Professional Liability Seminar Presented by: CID Insurance Programs, Inc.