Further bans and BI lawsuits could put agents and brokers in a precarious position

Given that many states and counties in the US are imposing tougher lockdown measures as cases continue to rise across the country, one expert predicts there will soon be another round of certain business interruption denials. In this environment, and based on the events observed over the past 10 months of the coronavirus pandemic, he has issued a warning to agents and brokers.

« I am sure to see a new wave where agents and brokers are in a precarious position and the standard of care is being re-tested, » said Ben Woodward (pictured), vice president of professional indemnity for Admiral Insurance Group, a Berkley company . « We have a decent book of agents and brokers, and we haven’t seen an influx of claims, but I’m still concerned about that [because] we’re in the middle of a second lockdown, and maybe even up to a third sometime, so. » there is no end in sight. « 

Read more: « It Just Gets Harder » Finding Business Interruption Coverage

There are a few key points that matter to Woodward right now. The first is that minor documentation procedures for Main Street agents and brokers and their overall standard of care may have loopholes that lawyers can dig into.

There are many specialist real estate agents and brokers who manifest themselves as experts, noted Woodward, « and maybe advertise on their websites as » We got you covered.  » In these cases, he told the insurance business, he could spot problems. Agents and brokers in particular may find themselves in hot water in special relationships where they have been paid a fee in addition to commissions, or when they have a longstanding relationship with a client and there is evidence that the client has relied on theirs Agents or brokers have been experts for years, but this professional has not raised any significant and relevant exposure to them or simply has not documented that it was exposure.

« At some point [clients] may be looking for alternative ways to recover and likely one of the next targets will be the agent or broker, » said the expert.

Read more: NJ Restaurants Filed Class Action Lawsuits for Denied COVID-19 Business Disruption Requests

Currently, freight forwarders such as Admiral Insurance are asking their agent and brokerage partners if they have updated their procedures and if they are telling customers so, depending on coverage, for example (especially the business interruption that was the focus), many coronavirus-related lawsuits may It may be difficult to find an affordable option that suits your needs, but the agent or broker will do their best to find coverage.

« For example, when you speak of a professional liability specialist in the field of architects and engineers, that exposure is nowhere near the same as that of a real estate specialist placing BI directly, » emphasized Woodward. “But there are a lot of smaller Main Street agents who say, ‘We work from home, we have a backup that we’ve been using for years, there are only two of us, and we don’t see the need [for any particular coverage because] we don’t see the exposure. ‘”

Read more: Six insurers face federal class action lawsuits for denying business interruption claims

Before agents and brokers become customers’ targets, they must evaluate their processes and change behaviors that can later lead to problems. Woodward advises that they make their customers aware of business interruptions and pandemics and document them. In fact, Admiral Insurance now needs additional information about each account, whether it’s new business or renewal, how these risks are being addressed with clients, and the risk management protocols agents and brokers have implemented to protect themselves .

« If you don’t bring it up, we want you to bring it up and come up with a plan that will make it part of your documentation and suggestion process so we can continue reporting, » said Woodward. « If it doesn’t happen, it’s worrying enough that we’re not ready to move forward. »

He added, « It’s better to just be overly careful with it. »

Further bans and BI lawsuits could put agents and brokers in a precarious position
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