Professional Insurance Agents of North Carolina
An association run by agents, for agents
November 2021

In this issue…

• Replacing professional liability requires attention to detail
• Celebrating PIANC Members
• Did You Know?
• Press Release – Repeal of Federal Insurance Office, PIA Top Priority, Introduced in House
• Want Ads 
• Thoughts for the Day
• Cookin’ with PIANC
• PIANC Officers and Staff Director

Replacing professional liability requires attention to detail

by Curtis M. Pearsall, CPCU, AIAF, CPIA
President – Pearsall Associates Inc. and
Consultant to the Utica National E&O Program

Much has been written about pricing increases, with professional liability probably most heavily impacted. This is prompting agencies to remarket the coverage, hoping to secure better pricing and terms. This can be fraught with problems unless your agency has a strong focus on details.

What makes management of liability troublesome is that there is virtually no standardization of carriers’ coverage forms.

Consider these key issues:

The app. Accuracy is critical, so have the client complete the app. At minimum, ask the questions and document the answers accordingly when meeting with the client. Ask the client to review and sign the app to ensure the information was taken down correctly. Information may have changed since last year, so be sure the app reflects current information.

Marketing timeframe. Allow sufficient time to propose the coverage, as the marketplace is currently difficult to predict.

Review the carrier proposal. Ensure the coverage requested is the coverage proposed – which is difficult to do without reviewing the proposal. Secure a specimen form to identify any issues, especially reductions, which need to be brought to the client’s attention. Provide the client with the specimen form to enable them to review it and identify any issues of concern.
Concern should be heightened when the coverage is reduced.

What activities are covered/excluded? Significant differences involve the description of covered professional services/ covered activities. Providing the client with a specimen form will be especially helpful if a problem subsequently develops.
Just because the activity is mentioned on the application does not mean coverage for that exposure is being provided. Review exclusions with the client to determine, to what degree, those exclusions are of concern.

Who is insured? This is a common area where professional liability policies can vary from carrier to carrier.

Is there “full prior acts” or a “retroactive date”? Professional liability is typically written on a claims-made form. There have been many large E&O claims dealing with a misunderstanding of this coverage form. The retroactive date will play a key role in whether there is coverage for a specific incident. Secure full prior acts coverage. If the professional liability contains a retroactive date, bring it to the customer’s attention and explain the significance.

Defense costs and how they work. Defense costs can apply “in addition to” the limit of liability or “within” the limit of liability. The basic duty is to obtain the coverage requested. The customer makes the decision as to what to purchase. It would be better to offer the options and let the customer decide. Create a paper trail. Documenting these discussions in an email to the insured is critical.

Deductible or Self-insured retention. A deductible can apply to defense costs and the judgement, or possibly only require payment of the deductible if the client is determined to be liable. A self-insured retention may require the client to handle their defense until the limit is reached. Make sure your client understands their obligations at claim time.

Celebrating PIANC Members

PIANC is happy to have the following new and renewing members as a part of our association.

• Bailey & King Ins & Realty, Wayne King, Jacksonville, NC
• Benfield Insurance Agency, Andrew Benfield, Taylorsville, NC
• Choice Insurance, Tom Freridge, Virginia Beach, VA
• Long Insurance Services, Monte Long, Kernersville, NC
• M3 Insurance Services, Monica Maggio-Moser, Aberdeen, NC

Did you know that Insurers Could See $20 Billion in Severe Storm Losses?

For the third straight year Aon says the increased number of losses comes despite 2021 being a below-average year for tornadoes, hail, and straight-line wind reports to the National Oceanic and Atmospheric Administration’s (NOAA) Storm Prediction Center.

Storms in early October caused an estimated $100 million in economic and insured losses. Severe hailstorms, straight-line wind, and several tornadoes caused substantial damage in the Midwest. Severe storms in the Plains, Great Lakes, and Midwest also caused millions in economic damage and insured losses in August. These weather events caused damage to property, vehicles, vegetation, and agriculture.

Join PIANC today
and take advantage of Member Benefits such as CE class discounts!!

Repeal of Federal Insurance Office, PIA Top Priority, Introduced in House

WASHINGTON – The National Association of Professional Insurance Agents (PIA) thanks Reps. Ben Cline (R-VA) and Tom Tiffany (R-WI) for introducing the Federal Insurance Office Abolishment Act. The bill was previously introduced in the 116th Congress.

“Created as part of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, the Federal Insurance Office (FIO) is an ongoing threat to our system of state-based insurance regulation,” said Jon Gentile, vice president of government relations for PIA.

In 2016, PIA became the first national insurance association to call for the repeal of the FIO. Throughout the last decade, the FIO has sought to expand its mandate by calling for federal regulation of mortgage insurance; for its inclusion in supervisory colleges, which are joint meetings of interested regulators and company officials; and to establish uniform national standards for state guaranty associations. In addition, it has sought to administer the National Association of Registered Agents and Brokers (NARAB). Each of these acts would be an overreach by the federal government.

More recently, the Biden administration issued an Executive Order giving the FIO new responsibilities to “assess climate-related issues or gaps in the supervision and regulation of insurers.” This is yet another example of improperly tasking the FIO with oversight of state-regulated insurers. If a climate assessment is warranted, it should be conducted by state insurance regulators.

“For over a hundred years, the state insurance regulatory system has worked well for insurance consumers and the industry. As long as the FIO continues to exist, it will remain a threat to state-based insurance regulation. It is past time to eliminate this superfluous federal bureaucracy.” Gentile said. “Inaction will allow this office to accrue more power over time and is tantamount to endorsing an increased federal role in insurance regulation. PIA will continue its efforts to protect the state-based regulatory system.”

PIA appreciates Reps. Cline and Tiffany taking this bold step to protect the state regulation of insurance. PIA will continue to build a base of support among lawmakers for repeal of the FIO. A Senate bill was previously introduced this Congress by Sen. Ted Cruz (R-TX).

Founded in 1931, PIA is a national trade association that represents member insurance agents and their employees who sell and service all kinds of insurance but specialize in coverage of automobiles, homes, and businesses. PIA’s web address is www.pianational.org.

Jobs Board

Thoughts for the Day

Cooking with PIANC

PIANC Officers

Keith Hayes – President
Jake A Parrott Ins Agency
2508 North Heritage Street
Kinston, NC 28502

PO Box 3547
Kinston. NC 28502-3547
Telephone: (252) 523.1041
khayes@parrottins.com

John Cook CIC – National Director
Pinnell Insurance Agency, a division of Watkins Insurance
PO Box 18
312 S Chestnut St.
Henderson, NC 27536-4128
Telephone: (252) 438.7129
jocook@pinnellins.com

Murray M. White III – Vice President
Murray White Insurance Agency, Inc.
606 Idol Street High Point, NC 27261-2196
Telephone: (336) 889-4747
m3@murraymwhiteinc.com

Dean Wooten – Secretary/Treasurer
Wooten Insurance
PO  Box 827
Statesville, NC  28687
Telephone: (704) 838-0837
djbb@wootenins.com

Mrs. Ann Cranford CPIA, CPIW, DAE, HCSS- Director
The Cranford Agency, Inc.
PO Box 99
906 S Fayetteville St.
Asheboro, NC 27204
Telephone: (336) 629.9100
ann@cranfordagency.com

Todd McLeod – Director
McLeod Insurance Agency, LLC
1203 S Fayetteville St.
Asheboro, NC 27203
Telephone: (336) 626.6670
mcleodins@triad.rr.com

 

PIANC Staff

Kevin P. Kowar
Association Executive, CIC, AU
1059 Technology Park Drive
Glen Allen, VA 23059
Work phone: (804) 486-4218
Kevin@bianc.net
 
Sheryl Chasse
Education Director
1059 Technology Park Drive
Glen Allen, VA 23059
Work phone: (804) 486-4221
Sheryl@bianc.net

Lisa Farnham, CPIA, ACSR
Account Manager – Professional Liability
1059 Technology Park Drive
Glen Allen, VA 23059
Telephone: (804)804-486-4222
LisaF@bianc.net

Dennis Rockwell
Marketing and Membership Manager
Matthews, NC
dennis@bianc.net

Kim Bishop
IT Support and Membership Assistant
West End, NC
Telephone:( 919) 247-4045
Kim@bianc.net

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