E&O Prevention
Strategies for the Professional Agent
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November 30, 2011


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Letter from the Editor

This month AOA would like to introduce you to a new feature to our monthly newsletter, entitle "AOA Tips, Views, News & More." Each month we will provide you with trends, developments and important information, including a loss prevention tip relevant to your insurance business. Also, please check our most recent PRESS RELEASE sent out on Monday updating the status of our Risk Management Program.

AgentsofAmerica.ORG forms a Strategic Partnership with Pearsall Associates Inc.


"Bringing the Best Together" - Agents of America is pleased to announce its newly formed partnership with Curtis Pearsall, President and Founder of Pearsall Associates Inc., an E&O risk management consultant specializing in helping agents protect themselves. Since 1987, Curt Pearsall was the manager of the Utica National Agents E&O program, one of the leaders in providing agents E&O protection.


Curt is a consultant and national expert on Errors and Omissions for insurance agencies. He specializes in E&O risk management and loss control by working with agencies to develop a "culture of E&O prevention" by understanding areas of potential liability and improving the focus on E&O loss control. Curt is a monthly contributor to many of the industry's leading journals. He also provides expert witness services to law firms for E&O claims and litigation.


Pearsall's services include:

  • Agency E&O audits and reviews
  • E&O seminars, workshops, and presentations
  • One-on-one agency consultation
  • Expert Witness work for E&O litigation


Curt will provide each month an article and a tip on timely E&O topics. See Curt's article below on "Make Education of your staff & customers a key piece in your E&O loss prevention program in 2012





AOA Tips, Views, News & More



E&O Tip by Curtis Pearsall,"Sending a Cover Letter with the Policy: Is General Better than Specific?" 


For more tips check out his E&O Blog


Also need you to create a hyperlink for the articles so that they can access here as well as below.]



Insurance Coverage Tip 

by Kristin Condi Toto of Martin & Company


Social Media Coverage: An Increasing Necessity for Employers


Social Media Coverage is becoming more prevalent in the Property & Casualty market. Insurance Companies are recognizing the increasing necessity for employers to have Social Media Coverageto protect against wrongful acts such as workplace bullying that occurs over Facebook, Twitter, LinkedIn, or other similar media applications.


Carolina Casualty, part of the Berkley Group, introduced a new Social Media Coverage Endorsement to be used with their Employment Practices Liability Program. This new coverage defines Social Media and Workplace Bullying, expands the definition of a wrongful act to include workplace bullying and offers new Social Media Coverage under Third Party Liability. Social Media exposures include Facebook, YouTube, Twitter, MySpace, LinkedIn, etc.


To view more "hot trends" in the Property & Casualty Insurance Marketplace, visit 

Martin & Company's Market Trends & Updates.



Financial Tip of the Month 

by Mike Brady of the Brady Financial Group, LLC.  


One component of insurance agency sales that is often overlooked is tax implications. The buyer and seller must be on the same page with regards to how the transaction is being treated for tax purposes. The sales agreement should clearly state how the asset is being valued and how earn outs/retention bonuses are handled. Consistent treatment by both parties is a must. Depending on timing, the difference between capital gain treatment and ordinary income can have a significant impact on what you "net" out of the agency sale. This is one of many important items that should be considered as part of an overall exit strategy. Check out Brady Financial Group.



Social Media Tip 

by Cynthia Cavoto of Marketing That Works For You


This month's EBook is entitled, "Big Money From Podcasting" we know you'll find this information valuable for your business. Please feel free to email us to share "Google's New Local Search." We know you'll find this information valuable for your business. Please feel free to email us to share your comments. In addition, we are happy to consider suggestions or topics you'd like us to put into an EBook


Each month, we will feature a brand new Social Media EBook that contains valuable information on how you can harness the power of social media. Each featured EBook will contain a wealth of information that will include such topics as Facebook, LinkedIn, Twitter, Email and Blogging to name a few.                                                                        


Result From Last Month's poll question:


Do you review the AM Best size rating of your errors and omission carrier (i.e. A+/XV, A/X)?


YES = 89%

NO  =  11%


This month's poll question:   


How do Insurance Agents obtain their Continuing Education?



~Live seminars

~Thru their state agent association 




On December 15-16, 2011, the DRI Professional Liability Committee, with participation from Agents of America, will be presenting a stand-alone Professional Liability Seminar in New York, NY. This DRI seminar will be the first of its kind, and our goal is to present a variety of topics relevant to lawyers and other professionals in the industry. The program will feature industry experts. For complete details see DRI EVENT.


Again, we want to thank everyone for their support.  Remember to tell your friends and business associates that AgentsofAmerica.ORG is now offering FREE MEMBERSHIP


Also, available for our readers, AgentsofAmerica.ORG is now offering a new service to all of our subscribers and readers to market their products, services or upcoming events, MARKET SOLUTIONS. This unique opportunity will allow you to reach thousands of Insurance Agents, Brokers and Insurance Professionals across the country in timely, efficient and cost effective manner. In addition to sending out your message, we can also help you use Internet Marketing as medium to convey your announcement, as well as on how it can be utilized to effectively grow your business. If you have any question, please send your inquiries to: info@agentsofamerica.org.


"Bringing the Best Together"

Brit Weimer, Esq.


Table of Contents

When Carriers Seek To Rescind

By Matt Marrone


Making Education of your staff 

By Curtis Pearsall


Sending a Cover Letter 

By Curtis Pearsall


Contingency Plans 

By Charles Wilson


Pre-Employment Test

By Michael Mercer, Ph.D.


High Quality Leads 

by Parsol Leads

E&O Loss Prevention 

By Brown & Brown


Indefinite Leave of Absence 

By Ellen Storch


Developing People

By Michael Beck


Do Clients Research Us 

By Mark Hunter


New NLRB Posting Requirements

By Nicole Tinkham


Excess Insurers Obligation 

By Elizabeth Caraballo


Subcontractor Revolt Take Hold

By Wilson Elser



Table of Contents

WhenWhen Carriers Seek Too Rescind

By Matt Marrone


Insurance coverage disputes between carriers and insureds are not all that uncommon. Reasonable minds can differ over the meanings of policy terms, exclusions, and even limits of coverage. What many folks don't realize, however, is that it's also common when coverage disputes arise for a carrier to take a close look at why it issued the policy in the first place. 



MakingMake Education of your staff 

By Curtis Pearsall


Virtually each and every day, there is no doubt that agency staff receive their share of inquiries on various insurance related matters. The inquiry could involve a producer trying to help a customer better understand their insurance program or it could involve an Account Exec fielding a question from a customer. Even claims staff are frequently put in the position of addressing insurance matters in the settlement of a claim. 



SendingSending a Cover Letter

By Curtis Pearsall


In many (probably most) states, there is a standard/expectation imposed on the client requiring them to read their policy. If an E&O claim were to develop, based on the facts, this could actually be part of the agency's defense. As a result, when sending a policy or policies to your customer, the best approach is to advise them that they should review the policy to ensure that it meets with their approval. 


ContingencyContingency Plans

By Charles Wilson


How can you create effective plans that will produce great outcomes in a crisis situation? Checklists or outlines are great tools - and they can grow and adapt easily to new situations or updated lessons. Start at a high level and work down to more detail. 



PrePre-Employment Test
By Michael Mercer, PhD. 


Fortunately, pre-employment tests can help you avoid hiring troublemakers - including applicants who have lousy or unproductive interpersonal skills. Three interpersonal skills of major concern are the applicant's level of:



HighHigh Quality Leads
By Parasol Leads


Insurance leads. No insurance business can be successful without them, but every agent knows how difficult it can be to obtain insurance leads that will actually lead to prospects that want and need the products offered. It's an odd scenario, because there are thousands upon thousands of people in the country who truly want and need affordable insurance, but it can be so challenging to actually connect with those people. 


EOE&O Loss Prevention 
By Brown & Brown


Description of Claim:


Hidden Dangers With New Client/New Business


Allegations against the agent: The Agent was approached by a new client to procure patent infringement coverage for his business. The underlying insured developed, patented, and manufactured a product that was to be marketed to dentists throughout the world. The agent had very limited knowledge of the client's operations and failed to adequately uncover the client's needs. 










indefinateIndefinite Leave of Absence....A "Reasonable Accommodation"?

By Ellen Storch, Esq. and Gregg Kligman Esq.


Yes, in some cases.


Based on recent changes to both federal law and EEOC regulations, employers may have to permit disabled employees to take leaves of absence longer than the 12 weeks required by the FMLA, and in some cases, indefinitely.

Read More... 


developingDeveloping People ~ A Key to Eliciting Excellence

By Michael Beck


There is tremendous opportunity and satisfaction as a leader in developing others. By effectively developing the people around us, we elicit excellence in a number of impactful and far-reaching ways. Developing others is an important function of effective leadership.




do"Do Clients Research Us on the Internet?"

By Mark Hunter "The Sales Hunter"


Anyone in business for any length of time has had to deal with the client who thinks they're smart, but in reality are far from it. I'm not referring to a person's overall intelligence, but to a situation where the client thinks they know everything about what our agency does before we've even opened our mouth. 








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newNew NLRB Posting Requirement Applies to YOU!

By Nicole Davis Tinkham, Esq. and Eric Brown, Esq.


By January 31, 2012, many private employers will be required to post a new National Labor Relations Board ("NLRB") 11-by-17-inch notice pursuant to a NLRB Final Rule. This posting requirement applies to employers with and without a unionized workforce. The NLRB's stated purpose of requiring this notice is to educate employees about their rights under the NLRA to organize and bargain collectively with their employers and to engage in other protected concerted activity under federal law. The Notice also instructs employers that they must refrain from preventing employees from engaging in any of the above protected activity.



excessExcess Insurers' Obligation Not Triggered When Insured Settled With Its Primary Carrier for Less Than the Primary Policy's Limit

By Elizabeth Caraballo, Esq.


The insured's settlement with its primary insurer for less than the full limits of liability under its primary policy did not trigger coverage under the excess carriers' policies as the primary policy had not been properly "exhausted." Citigroup Inc. v. Federal Ins. Co., et al., No. 10-20445, 2011 U.S. App. LEXIS 16316 (5th Cir. Aug. 5, 2011).


subcontractorsSubcontractors' Revolt Takes Hold in California: New Law Bans Indemnity

For Active Negligence in Construction Contracts

Wilson Elser


Construction contracts that purport to insure or indemnify for the active negligence or willful misconduct of the promisee are void and unenforceable as against public policy.


Motivational Quotes/Joke of the Month

"I give people put-ups.  What's a put-up?  A put-up is the opposite of a put-down."

- Ross Mathews


"The key is not to allow words of defeat or negativity to come out of your mouth"

- Joel Osteen


"Feeling gratitude and not expressing it is like wrapping a present and not giving it."

- William Arthur Ward


"Kind words can be sort of easy to speak, but their echoes truly are endless."

- Mother Teresa


- - - - - - - - - - - - - - - - - - - - - - - - -


Teacher:  "What's the capitol of Ohio?" 

Student:  "O."

- adapted from scene in "Glee" TV show



The Motivational Quotes and Joke-of-the-Month are provided for AgentsofAmerica.ORG members by Michael Mercer, Ph.D., www.Pre-EmploymentTests.com. HIRE THE BEST - & AVOID THE REST™, Mercer Systems, Inc.; Michael Mercer, Ph.D., Book Author & Management Psychologist, President. Phone = 847-382-0690; Website = www.Pre-EmploymentTests.com.

This newsletter is produced in conjunction with Agents of America, www.agentsofamerica.org. The contents of which may not be reproduced without the express written permission of Agents of America.