1. Claims by Carriers v. Agents

2. Claim trends Agency agreements:
Risk transfer provisions including the transfer of responsibility for document retention from the carrier to the agent. Carrier does not want certain documentation in its file, but rather requires the agent to keep the documentation (ie UM/UIM rejection form) until a loss occurs.
Indemnity suits based on agency agreements and premium financing agreements that contain provisions which shift significant E&O exposure to the agent for individual insurance transactions.
Carrier rescissions:
Post-loss underwriting practice of running credit history and background check on every homeowner who reported a claim and then comparing that information to the original insurance application to see if there were any undisclosed foreclosures, bankruptcies, debts, liens or criminal convictions.

3. How it all plays out What happens?
The carrier pays the indemnity for loss to its policyholder and then files a subrogation action against the insurance agent necessitating a claim to be made with the agent's E&O carrier.
~~ OR~~
The policyholder files a claim against the carrier for coverage and the carrier files a third party complaint against the agent seeking indemnity.
Why does the carrier pay?
The carrier is found to have coverage via a declaratory judgment action or believes that it will lose a coverage action.
Is it better for the agent if the carrier pays first or sues first?
The carrier may pay a questionable claim or overpay if it appears there is a viable claim against the agent.
However, it can be beneficial to have the claim resolved, taking the sympathetic party out of the litigation.

4. How can an agent minimize the risk?
Document, document, document.
Fully understand and document policies and procedures utilized by the insurance carriers with which they do business.
Review all agency agreements and addendums to identify exposures that the Agency may face under risk transfer provisions.
Require the customer to complete all questions on an application.
Do not assure a customer that a carrier will backdate a policy.
Do not assume that a carrier will cover a questionable loss.
Do not argue for coverage from the carrier on behalf of the customer without submitting a potential claim to its E&O carrier.

6. Legal notice
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The information and opinions contained in the presentation are provided as at the date of the presentation and are subject to change without notice. Although the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage or loss resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial or consequential loss relating to this presentation.