As the coronavirus pandemic has made its way throughout the United States this year, those in the insurance industry have come to terms with the likelihood of a major increase in claims volume. Much of the earlier focus was regarding the pressure on insurers that write business interruption policies. However, it’s now known that many disparate lines of coverage are likely to see a significant rise in claims, whether directly caused by COVID-19 itself or by social, governmental, or institutional reactions to it.
One such line of coverage that is set up for major disruption is E&O insurance. The potential for E&O Claims to see a major rise is becoming more evident. These policies cover actual or alleged acts, errors, misstatements, misleading statements, neglect, omissions, or breach of duty committed by an agent or broker while providing insurance services for pay. The language around a policy usually provides limited coverage for breaches of privacy and breaches of network security in the provisions of services.
Here’s a look at some of the anticipated claims that those in the E&O coverage world may see in the coming weeks and months.
Anticipated Claims Facing E&O Insurance
Generally speaking, COVID-19-related claims are likely to see a rise under many of the same E&O policy provisions that are commonly an issue in other types of claims. The economic climate matched with the political and societal responses to the coronavirus outbreak has increased the likelihood of several scenarios that may lead to E&O claims.
In particular, there may be a rise in claims against insurance agents and brokers for failing to procure significant and sufficient business interruption or business income coverage, which typically includes the loss of income but excludes ordinary operating expenses. In general, this kind of coverage applies during the time required to repair or replace damaged property.
Another anticipated E&O claim against insurers and brokers is failure to provide timely notice of claims under policies where agents and brokers assumed wrongly that there would be no coverage, as well as guaranteeing coverage for a COVID-19-related claim where no coverage exists under a client’s policy.
Moving forward, insurers and brokers may expect to see E&O claims in connection to filing claims on behalf of clients for COVID-19-related losses that do not qualify for coverage or are excluded under their policies, without having their clients review the loss forms before submission.
There’s also the potential for claims in which a broker or agent doesn’t heed a client’s request to wait and see what happens with coronavirus-related losses where coverage is questionable.
Additionally, for E&O policies that include coverage for network security breaches, there may be a rise in claims due to the jump in prevalence of work from home, including for insurance agents and staff across the country. If a client now working remotely did not get the appropriate level of coverage, an insurance agent could end up facing repercussions. Agencies and brokerages need to be sure to review their business interruption, workers’ compensation, and EPLI to start
While an insurance company has the duty to defend a client, if a business’ coverage is not sufficient, it can end up costing them a lot of money and hurt their reputation in the long run. Having the sufficient coverage is becoming increasingly important. Many agents in the E&O industry are beginning to add certain exclusions to COVID-19-related claims, so extra caution is needed when moving coverage.
About Axis Insurance
At Axis Insurance Services, we aim to help our customers identify their exposures and protect themselves. Founded in 1999, we offer insurance programs to a wide variety of professionals and industries including attorneys, real estate, healthcare, architects, and more, and also have a wholesale division. We pride ourselves on offering flexible insurance coverage tailored specifically to each customer’s needs. To learn more about our solutions, contact us at (877) 787-5258 to speak with one of our professionals.