Brokers: are you spotting the exclusions?

Brokers: are you spotting the exclusions?

Brokers: are you spotting the exclusions? We all face a complex web of exposures in the workplace. Professional and management liability insurance is there to protect us – but it’s not always the easiest product to understand.

It is vitally important to register correct job classification to ensure holistic coverage in a professional liability policy. But not everyone gets it right, according to Michele Epstein, vice president, professional & management liability, RIC Insurance General Agency.

“The professional and management liability market space is healthy but it’s soft,” Epstein told Insurance Business. “Premiums have been trending downwards and there’s a lot of competition. Instead of having two carriers, you’ve now got five competing for the same account.

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“We do face some challenges. The market appetite is large but the policies written are not always comprehensive enough. The task is being able to identify the right column so that clients don’t end up with a gap in their coverage.”

Not all retail brokers have sufficient expertise and understanding to sell specialty professional and management liability coverage. It’s down to the wholesale or specialty broker to educate retail agents in this space, according to Epstein.

“Sometimes policies that may seem simple have some very ambiguous subjectivities or exclusions that could negate part of the coverage,” commented Epstein. “The challenge is making sure that any exclusion is either removed or that the insured fully understands that an exclusion could negate the coverage. The problem is, not all brokers spot the exclusions.”

As the insurance industry trends towards digitalization, the potential for coverage gaps, exclusions and mistakes becomes greater, said Epstein. If the insured or the retail agent goes online to purchase insurance, the issue of misclassification comes into play.

“The term consultant has become a very large umbrella in the professional space,” Epstein said. “I recently reviewed a policy for renewal that was written for a consultant via an online platform. When I looked at the expiring policy, I spotted exclusions for certain services that the particular applicant was performing.

“But the insured didn’t know about these exclusions. They had a small percentage of high hazard work that, if a claim were to occur, could have led to the carrier refusing to pay. I believe the carrier would have denied a claim on the basis that the client did not tell them about their high hazard work. It’s misclassification under the term consultant.”

So, misclassification could become an issue via direct online quoting and binding if the customer chooses to forego the additional advice of an insurance expert.


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