Fundamentals and Trends of Professional Liability Insurance

Nicole Panteloucos  00:00:06
Hello everyone, and thank you for joining us today. I'm Nicole Panteloucos, Senior Journalist with Insurance Business magazine, and it's my pleasure to welcome you to sovereign insurances exclusive webinar, fundamentals and trends of professional liability insurance. We're thrilled to have two expert speakers from sovereign insurance with us today. Andre Linsky, Senior Manager of Professional and Management Liability and Laura Marcantonio, underwriting specialist in professional liability, over the next 45 minutes, Andre and Laura will dive into essential you know, trends, real life claim scenarios and the most pressing exposures and professional liability, you'll leave with actionable insights to enhance your understanding and approach to this critical area of insurance. At the end of the presentation, we'll open up the floor for a Q and A session. So please feel free to type any questions you have into the Q and A box in the webinar software. Without further ado, I'll hand it over to our panelists. Thank you again for joining us today and enjoy the presentation.
 

Andre Linsky  00:01:00
Thanks so much, Nicole. So first of all, thank you for joining us this afternoon. We hope you will enjoy this session and learn something new today. So my name is Andrei Linsky, and I have the pleasure to be presenting today with my colleague, Laura Marcantonio that you see on the screen as well. Let me introduce myself. So this will be or this is my 20th year within the insurance industry. I started my career as an insurance broker in personal lines in Montreal, and worked my way through commercial insurance, followed by specialty insurance here in Ontario. I previously worked at Liberty, the guarantee company of North America, which you all know now became intact. I also worked at CNA Canada, and I'm currently working at Sovereign general insurance as the Senior Manager, professional and management liability. I have also been teaching CIP classes at the Insurance Institute, the Quebec chapter, for the past three years, which is something I really enjoy. I will pass it now to Laura so she can introduce herself.
 

Laura Marcantonio  00:02:05
Thanks Andre and good afternoon everybody like Andre said, my name is Laura. I've been in the insurance industry for 12 years and underwriting professional lines for 10 of those years now, I've held senior, you know, underwriting roles at various insurance companies, but most recently, I've been working at Sovereign for almost four years now.
 

Laura Marcantonio  00:02:34
So in this lesson, we will provide an introduction to professional liability insurance. First, we will explain what professional liability covers. Then we will get into the anatomy of a professional liability policy. So considering the policy structure and some key things to look out for. Next, we will discuss important underwriting criteria, and finally, we will discuss some real world examples and current market trends. As it was previously said, there will be some time at the end for questions. So if there's something you'd like to ask, please type it in the chat. There will also be a few poll questions throughout the presentation. And to start off, I'd like to take a poll to get a sense of our audiences experience in the professional liability space. So how would you rate your current knowledge of the professional liability space? The answers should come up shortly. I
 

Laura Marcantonio  00:03:51
so we'll just take 30 seconds here so everyone has a chance to answer you.
 

Laura Marcantonio  00:04:03
Uh, Andre, do you see the screen?
 

Andre Linsky  00:04:06
I don't see the the questions on the screen.
 

Andre Linsky  00:04:16
Maybe we have a little technical difficulty here. Okay, well, okay,
 

Laura Marcantonio  00:04:20
so I see it here. I see it. Sorry. It just came up now. Okay, so 53% said needs brushing up on. So that's good. Over half of you will get something out of this presentation. So great. Any experts, okay, 35 very little knowledge, 13% experts, okay, so don't criticize this presentation too hard.
 

Laura Marcantonio  00:04:55
So what is professional liability insurance? It's also referred to as errors. Emissions, or for short, you know, this type of insurance helps to protect individuals and corporations that provide any type of professional service. Most professional services require specialized training or education, and the individual Typically holds professional degrees or licenses and possess specific skills. Think of a doctor or lawyer and rigorous education and training they need to complete. For example, it can take eight years to become a lawyer in Canada, from achieving a bachelor's degree, then going to law school, getting experience in the field, and then passing the bar, because professionals are providing such a specialized service, any failure to perform the service can result in a negligence claim against them, in which the insurer has a duty to defend the claim. Other claims can result from third party financial loss, an error or omission in the service or product sold by the professional. As an example, think of an accountant filing a tax return for one of their clients. The tax return was filed late, and the accountant's client was fined by the CRA essentially, the end result is financial loss to the client. I will now get into the structure of a professional liability policy, just as a disclaimer. Each policy is different, and it varies by insurer, but there's an overall shape to a policy which is common to most of them. First is the ensuring agreement. It is the portion of the contract that describes what is covered. It is essentially a promise by the insurer to indemnify the insured from all loss sustained by a claim made against the insured, as long as certain conditions apply. For instance, the claim must be made during the policy period or any extended reporting period and must be notified to the insurer as soon as reasonably practicable. Sovereign's ensuring agreement on the professional liability policy also includes supplemental payments if these are purchased by the client. In this section, the insurer promises to indemnify for lost wages or earnings incurred while the insured is defending a claim or legal fees incurred in response to a disciplinary proceeding brought against the insured. And these limits are usually in addition to the policy aggregate limit of liability. So all professional liability policies will include a definition section. It includes defined terms which are important to understand throughout the policy some common definitions are listed here, such as claim, which is usually defined as a written demand a civil proceeding or regulatory proceeding against the insured loss means damages or defense costs. Damages are in the form of monetary a monetary award to be paid to a claimant as compensation for loss and defense costs are typically made up of lawyer fees, court costs and other costs. Defense costs in a professional liability policy are usually in addition to the limit of liability, but check the policy wording to make sure that's a fact and a wrongful act, as outlined here, means any actual or alleged error or negligence committed by the insured in the conduct of their professional capacity, whatever that profession may be. Now, some common exclusions on a PL policy are listed on the screen. Most of these exclusions are in place because other insurance exists for the types of exposures. For instance, bodily injury or property damage is covered under a commercial general liability policy. Employment related claims are covered under a DNO policy or an EPL policy. Professional Liability Insurance also does not cover any intentional wrongdoing or fraudulent acts. This exclusion means that if a claim arises from criminal activity or intentional fraud, the insurance policy will not provide coverage for defense costs or any resulting settlements.
 

Laura Marcantonio  00:09:35
These are some common extensions of coverage which are typically added by endorsement, I already mentioned lost wages or earnings and legal fees incurred by disciplinary proceedings, which are supplementary to the policy. Cyber is a complex one. Most professional liability policies are silent on cyber unless specifically excluded by endorsement and. Which we could probably talk about for another hour, but for the purposes of this webinar, just be aware if any cyber coverage exists on the policy, although, since cyber claims are on the rise, most companies will benefit from a standalone cyber policy. First dollar defense is an additional insurance coverage option that may be purchased on a PL policy. You may also hear first dollar defense called a loss only deductible, or indemnity only deductible. Basically it means, if the claim arises, the insurer pays the first dollar to defend the claim, and in turn, the insured only pays their deductible if indemnity is paid on the claim.
 

Laura Marcantonio  00:10:48
Another part of a professional liability policy is the duty to defend. Clause I've included here an example the insurer has the right and duty to defend any suit against the insured seeking compensatory damages, even if the allegations of the suit are groundless or fraudulent. As a general rule, an insured only needs to establish that there is potential for coverage under a policy to give rise to the insurer's duty to defend. Therefore, the duty to defend may exist even where coverage is in doubt and ultimately does not apply. The main principle of this rule is that an insurer's duty to defend and insured is broader than its duty to indemnify. An insurer may owe a duty to defend its insured against a claim in which ultimately no damages are awarded, and any doubt as to whether the facts support a duty to defend is usually resolved in the insurer's favor.
 

Laura Marcantonio  00:11:49
So claims made policies, insurance companies ordinarily writes professional liability policies on a claims made form. This means the insurer helps cover claims filed during the policy period, regardless of when the wrongful act that gave rise to the claim took place. There are two features of a claims made policy that can affect coverage, first being the retroactive date your policy provides coverage if an incident occurs on or after a specified date. And then there's the extended reporting period. This helps cover claims made during a specified time after your policy expires. Generally it lasts between 30 and 60 days, unless a longer term is purchased. A claim will be covered if these rules apply. But also the notification of a claim is also subject to conditions, as defined in the policy.
 

Laura Marcantonio  00:12:50
Professional liability policy will have notification requirements each insurers language can differ, but they all hold a common theme. These requirements may include specific provisions regarding when and how to notify the insurer, what information to provide and who to contact. But beyond that, also bear in mind other notification obligations which can appear on a policy. It might be that you notify circumstances or claim as soon as reasonably practicable. Some policies merely require you to do so within the policy period. In a perfect world, an insured should notify the insurer of a claim as soon as they first become aware of a claim or circumstance that may give rise to a claim so
 

Laura Marcantonio  00:13:43
so CGL versus Eno, we all know of the commercial general liability policy, which covers bodily injury, personal injury or property damage caused to a third party. The general liability policy is typically quite broad in scope and covers things like clip and falls, products liability, issues, accidental damage by business tenant to a lease location, etc, with general liability. The key is that there has to be bodily injury, property damage for this policy to respond. It is important to note that the GL policy contains an exclusion for professional services, hence the gap in coverage, whereas professional liability insurance covers claims made against the services you have provided. I should also note that the CGL policy is on an occurrence form versus the claims made form, as previously discussed, an occurrence policy covers claims arising from acts or incidents that occurred during the policy period, regardless of when the claim is made. For policies written on an occurrence form, the timing of when the claim is made doesn't matter. Could be years later. Here What matters is when the act or incident that gave rise to the claim took place.
 

Laura Marcantonio  00:15:11
So what can lead to an Eno lawsuit? Remember that the legal causes of action for an Eno lawsuit can vary from professional negligence, such as an accusation that the work was careless or didn't meet industry standards to a breach of contract. For instance, a customer accuses a professional of not honoring the promises made in the contract. To make a case, the plaintiff will have to establish that the work failed to meet a client's expectations of reasonable care industry standards or obligations outlined in the contract, the plaintiff suffered financial damages, and the damages are related to the fact that the work didn't meet the professional standards. So listed here are some errors that could occur, such as poor communication. The agreement between the insured and the client was misunderstood, and the outcome was not as expected. Clerical errors or where the service does not align with the details stipulated in the contract, failure to disclose all relevant information was not provided to a client and late work. For example, a real estate development project incurred a lengthy delay so the owner of the project might sue the project manager for financial loss.
 

Laura Marcantonio  00:16:37
I mentioned before professional standards. This is what is referred to as the standard of care. Professionals are held to a high standard of care because they are experts in their fields. It is a legal term that is applied to determine if a professional or corporation should be held liable for harming others. The standard of care exists when a professional engages in certain activities or provides services, this creates a duty of care. If a person or company breaches the standard of care applicable in a certain situation, they are responsible for any harm that occurs as a direct result of the breach. Think of a medical professional where a standard of care is used to determine liability. Every medical practitioner's actions or inactions are judged based on what a reasonably competent provider with the same level of training would have done under the same circumstances. If the care providers actions were reasonable based on what a similarly trained professional would have done, then the provider is not considered to be negligent. Specialists, for example, are held to a higher standard of care than the average doctor. An ER doctor who missed the symptoms of a heart problem may not necessarily be considered negligent, while a cardiologist might be if the cardiologist missed the same symptoms the
 

Laura Marcantonio  00:18:04
so any business that offers their customers advice or services would benefit from an Eno policy. There are also regulated professions in each province, and they are governed by their applicable licensing body. For instance, any profession within the financial services sector is regulated, such as financial advisors or life agents. Also other regulated professions include lawyers, engineers, architects, insurance brokers and medical professionals, just to name a few.
 

Laura Marcantonio  00:18:42
So why businesses need you know, it's pretty simple. Lawsuits are costly, so This coverage protects the business from economic loss or even bankruptcy. It might be required by a customer's contract to carry, you know, insurance. It might be required by law, as I just mentioned, and it gives customers a sense of security. So here are a couple of examples. Insurance Agents advise their customers on the amount of coverage they need, leaving them open to face accusations of professional negligence, making a mistake in coverage or failing to deliver a promise of services. Realtors negotiate with clients on price listings and legal disclosure issues which could result in a client lawsuit, a customer might accuse them of negligence or a breach of their fiduciary duties, such as failing to disclose an issue with a property so Um, okay, I'm going to stop talking now and hand it over to Andre to talk about the underwriting process.
 

Andre Linsky  00:19:51
So thank you so much, Laura. Hopefully you all appreciated the information provided so far in this presentation. So so I will continue on. So we'll talk about Eno underwriter. So what happens when an Eno underwriter looks at the submission? Okay? So you know, underwriters will use various tools in order to analyze and properly underwrite professional liability risks. So the first and most important underwriting tool that they will have is the application filled by the insured. The insured will fill the application when they are inquiring for Eno insurance for the first time, and will need to fill this probably shorter version at each renewal period to ensure that there are no material changes in their operations and controls. Year over year, the application is critical, as it provides essential information for assessing the risk level associated with the prospective client. The application helps on the riders to identify particular risk factors relevant to the applicant's operations, such as high risk services, business volume, client types, and any recurring issues that may suggest the pattern of risk. It also contains detailed information about the applicant's general business activities, internal controls and procedures, and will also provide a lost history that will be critical to the underwriter in his analysis. Underwriters will also use the information provided by the application to calculate appropriate premiums, established limits that they want to offer, and decide on specific policy exclusions or endorsements they may want to use on the policy. The application is also an important document, as if an applicant omits or misrepresents information on the application, it may affect the coverage provided under the pulse. Now let's talk about experience of the professional the professionals experience is very important for you know, underwriting as well. Professionals with the more experience in their field of practice will tend to have a better understanding of the risks related to their profession, and who will be committing less mistakes, having learned, hopefully, having learned from previous situations. There is specialized classes of you know, not, not all you know, policy or miscellaneous you know, obviously, so there's some specialized classes that require specialized underwriting given the potential severity or frequency of the losses or the different exposures faced by this insurance. For example, architects and engineer you know, any requires different underwriting due to the unique nature of services provided by these professionals. They're also facing specific risks within the work they do, and they work in a unique regulatory environment. The underwriters need to understand this. Another example is manufacturer you know, manufacturers face very different exposures. If we compare them to professional services providers like accountants or lawyers, for example, and underwriters will be evaluating very different risk factors when analyzing these submissions. There's also tech Eno. Technology. Eno is another type of product that is different from the usual miscellaneous Eno products, given the type of risks these companies are facing and the type of services they provide, tech Eno will, for example, be focusing more on professionals in the tech sectors, like, for example, software developers and IT consultants, underwriters will need To understand these specific classes of business better and understand the risks and challenges each one of these professionals is facing within their profession. Another very important element of Vienna underwriting is the definition of professional services. It has to be properly defined on the declarations page if you're a broker and you want to look what professional services are covered by the policy. The declaration page is where you need to go. The list of professional services will be shown on that declaration page, and is very important as it will clarify the scope of coverage and will help avoid coverage misunderstanding in the future. It also helps to limit unintended exposures of which the insurer is not aware. The main insurance agreement of most Eno insurance policies that Laura discussed earlier normally refers to this definition of professional services, right? So it says that the policy covers wrongful acts and wrongful acts that are basically defined, sorry, that are in the provision of professional services that are defined on the deck page. Okay, the loss history can be found on loss runs or can be part of the declarations made by the client on the application. Loss history is essential for Eno underwriting as it provides important and valuable insights into the potential risk of future claims for the applicant. Past events never guarantee the future, but could show some negative trends, if not being dealt with, underwriters will not only look at the quality of the quantity story of claims. Or payout amounts, but will also look into the events that led to the claim. This research will often help underwriters assess the client's risk management practices. So if I give you an example, did the insurer actually apply the controls they mentioned on the application when an actual claim occurred? Loss history will also help underwriters to identify claim patterns and ask additional questions to the client or broker regarding their future risk mitigation practices. Underwriters will typically hope that the client learned something from a past loss experience and implemented controls or procedures to avoid the future real currents. Obviously, loss history, as you all know, will also affect pricing and premium calculations. As claims free, clients will tend to get credits or discounts on their Eno rates. Clients with multiple losses could see their insurance applications rejected or may be facing premium increases. Finally, loss history may help an underwriter looking at the Nexus opportunity to determine what level of attachment is suitable for the insurer. And finally, underwriting expertise that you can see on this slide. So underwriting expertise is crucial for specialized products like Eno insurance, underwriters will need a deep expertise of the specific risks each profession entails, as it will have its unique, unique exposures, regulations and standards. Knowledge of the regulatory space around different professions is also very important for professional liability underwriters. So we can, okay, perfect. So various PL products that exist on the market. So, contrary to a GL policy, there's obviously multiple different, you know, products available, first of all, miscellaneous, you know, which covers a range of professionals that don't fall under standard, you know, categories. A few examples can be consultants, event planners, recruitment and staffing agencies, travel agents and tour operators, property managers, home inspectors, fitness trainers, appraisers, etc. We there's probably over 100 of these classes that exists, then we have any architects and engineers and design consultants. It includes architects and engineers. Obviously, there is different classes of engineers, right? They're not only engineers, but they could also be engineers that are civil engineers, structural engineers, mechanical, electrical, geotechnical, environmental, land surveyors. So obviously different engineers entail different risk exposures and aren't looked at the same way by underwriters, and then we are medical malpractice. So we would think that we're only talking here about doctors or dentists, but several other professionals need to buy medical malpractice insurance. Pretty much any medical professional who provides medical care, treatment, diagnosis or advice will need a medal policy. Many buyers will include nurses, social workers, psychotherapists, radiologists, physical therapists, optometrists, midwives, lab technicians and even cosmeticians that administer injectables to their clients need mid molecules.
 

Andre Linsky  00:28:36
Manufacturers, you know, which complements CGL policy for policies for manufacturers, providing coverage against financial loss to third parties, financial institutions, you know, which protects financial professionals against alleged wrongful advice or for administrative mistakes they can make okay. We have lawyers you know, which protects, obviously, lawyers against negligence claims lawyers or their staff can be held liable for. You see accountants who could face negligence claims as well and can be held liable for wrongful advice. You saw, I think Laura earlier mentioned tax preparation mistakes, Audit and Review mistakes, client losses, etc. There's, there's different claims possible, obviously for all these professionals and obviously insurance brokers. I'm sure we have insurance brokers in the room, and you're all aware of the typically no exposures faced by insurance brokers. Typical exposures will include misrepresentation, failure to place coverage, wrongful advice, inadequate coverage provided to clients, administrative errors and in some cases, professional misconduct, will be covered as well by these policies, depending on different provincial regulations. Okay. So now we're going to do a poll. So what do you think is the most common professional liability claim for paralegals, okay, which is a specific class of business. So is it? So it should be popping up right now, I cannot see it, but I believe it's popping up now. So you have a few choices, you have breach of contract, you have client disputes, or you have late filings. So let's wait a few seconds and see what is the choice here. I
 

Andre Linsky  00:30:46
Okay, just a few more seconds. So is it breach of contract, client disputes or late filings? So we have breach of contract, 22% we have client disputes, 19% and we have late filings 51% so we see the right answer. It is, you all pass. Most of you pass. So good, good. Guess it's late filings that are the most common claim, and it's obviously high frequency class of business in terms of claims, rather than high severity. So we can go now to my favorite part of this presentation, claim scenarios, right? Because if you're selling, you know, insurance, obviously the best way to sell it to your client is your clients is to talk about claim scenarios. So we will start with the first claim scenario that we have here on the screen, so life agents. So life agents misrepresented the health condition clients out of country medical expenses were denied by the carrier based on the pre existing condition because material facts about the client's health were misrepresented, an action against the life agent ensued with an allegation that the policy application and policy language was not reviewed in detail with the client. So this is very common claim. Another type of claim we will see quite often is when people misrepresent on their life insurance applications. Example, they forget, or they answer that they do not take drugs drugs, or that they don't smoke while they smoke, and then they say the life agent didn't tell them that not saying the truth on the application could harm them if a claim occurs. So this is very typical, so we can go to the second claim scenario, insurance broker. So sorry for insurance brokers who are here on the call. An insurance broker contacted the client and recommended an additional type of coverage to protect him against lawsuits by employees. The client told the broker he wasn't worried about employee related suits and that he also didn't want to pay any additional PRI a loss occurred, and the suit was filed by an employee. The insured claimed in court that the broker never mentioned any such coverage to him. The broker has no record in his files of any conversation, nor did he document the file by sending the insured a letter confirming the conversation. So obviously, in this case, even if the broker did the right thing by offering the coverage, he never documented the fact that he did offer it okay. So he could have recorded the call. He could have confirmed by by email to the client. He could have had notes in his file, but he had none of this, so he was probably held liable here in this situation. Let's go to the third claim example. Okay, so real estate appraisal. Okay, so these are common as well. This will happen even more in in real estate markets, where real estate prices go down like something we saw lately with the interest rate situation in Canada. So real estate appraiser, XYZ appraisal company, provides an accurate appraisal for mortgage lenders significantly overestimating the value of a property. The lender, relying on this appraisal, approved the mortgage loan for a borrower who ultimately defaulted. As a result, the lender faced financial losses due to the difference between the loan amount and the actual value of the property. The situation also caused potential damage to the lender's reputation and increase scrutiny from regulatory authorities. Okay, so another one that we see, that we can see, not that often, but those are more severity driven claims. So the fourth example, ABC, tax. The associates filed taxes for a small business client with certain deductions that were not allowed by the CRA as a result of this mistake, the client was audited and had to pay a significant penalty and hire another tax consultant to fix the issue, which cost financial strain on the business. So typical accountants claim scenario again, architects, sorry. So an architectural firm designed multiple apartment buildings in a multi family housing development. The Architect included windows in one of the bedrooms that were insufficient to meet the code requirement for light and ventilation preventing the property owner from renting the spaces as two bedroom units. Windows had to be removed and replaced into buildings that had already been built so so obviously, quite expensive. Right to do so this is architects claim. So we're going to go to the sixth claim scenario, property manager. So following the water damage loss in the building managed by property manager, the client had an opportunity to recover self insured losses from a unit owner. During settlement negotiations between the condo board and the unit owner, the property manager failed to notify the condo board of additional invoices related to the water damage notes, the condo board settled with the unit owner without knowing the full value of the damage, and could be sued, obviously, for this. Okay, we're gonna go to the seventh one so we have an insurance broker again. Client believed he had overland water coverage for his riverfront cottage when the river rising cost flooding to the cottage. Clients property claim was denied, and client pursued litigation against the broker. Right? So as insurance brokers, obviously they need to be careful when they when they discuss coverage with clients, and need to confirm that there may be limitations to coverage. But this is again, very typical claim we will see for insurance brokers. So the eighth example, it's a life agent again. So in selling a top up disability policy to a client, the life agent, failed to review the terms of the underlying disabled disability policy. There are underlying policy at the clawback clause that reduced any entitlements by other payments, rendering $0 payable by the underlying policy when the client qualified for disability. Okay, so obviously there's a fault from the life agent here. If we go to the ninth claim example, you know, there's a lot of claim examples, but we think this gives you a better idea of what type of exposures professionals face. We feel it's important to go over this. So paralegals, the paralegal missed legal timelines and filing client for filing client materials, the client incurred significant additional legal expenses to correct the paralegals error. So obviously we that's one of those situations that we asked in the poll early and finally, the least, but not last, the financial advisor claim. So the financial advisor deposited proceeds from investment into an obsolete bank account for the client. The Bank had reassigned the account number to a new entity who declined to return the misdirected funds until named in litigation. Okay, so this is more on the fi side of things, type of claims we could see. So this was for the claim scenario. So hopefully this helps you to understand a little bit better what types of exposures your clients are facing, or clients are facing, usually in in terms of, you know? So, hey, we like polls. We're gonna do another one. So what do you think is the average settlement in an E, no lawsuit. Okay, so the box should appear shortly you will have three choices, 58,100 40,000 or 550,000 This is in Canadian dollars, by the way. Okay. So again, 58,100 40,000 or 550,000 so what do you think the answer is? Okay, we'll wait just few more seconds, and we should get the results.
 

Andre Linsky  00:39:53
And here we go. So most of you think that the right answer is 140,000 63% of you actually, 24% think it's 58,013% think it's 550,000 or you think they're that expensive. So the right answer is 140,000 is the average you know, loss. So it's not, it's not small claims, right? It's, it's still a lot of money. And if clients don't buy, you know, insurance, remember, they have to pay this out of pocket, so, so it's still a lot of money there. So I'll pass it to Laura for the last few slides.
 

Laura Marcantonio  00:40:39
Okay, great. Thanks. Andre, may get into the loss control measures now there are a number of lost control measures that will benefit any professional develop clear and comprehensive contracts that outline the scope of services with specifically defined deliverables. This will eliminate ambiguity by detailing the specifics of the service provision, including timelines, deliverables and payment schedules. From a legal standpoint, this clarity can prevent misunderstandings and foster positive business relationships. It is also very important to have a lawyer review all contracts. A contract review allows all parties involved to identify and implement necessary changes that align with the original intentions and objectives of the agreement and ensure a fair and mutually beneficial contractual relationship, proper documentation and communication. This is especially important. If something goes wrong, it is always a good idea to take notes while communicating with a client, or record phone conversations. Basically, keep record of all communications with the client. Supervision of employees. This is especially true with more junior employees, and know the laws, regulations and industry practices for your profession. And lastly, there should be an increased focus on risk mitigation efforts such as training programs, awareness campaigns, educational resources and increased communication. These efforts are directed at reducing the likelihood of an email claim being filed, many other lines of business have refocused their efforts toward prevention in recent years, and you know, is likely to continue following that trend. So I'm going to get into some of the current trends in the ENO space. As this businesses across all industries continue to expand and evolve. They open themselves up to new risks and exposures, particularly when it comes to the services they offer clients. Some businesses, of course, have the potential for more frequent or significant errors than others simply due to the professional services they provide. So remote work became prevalent during the pandemic, and even though we're getting back to the office, we still have that flexibility. One issue is that many managers and workers are concerned about mentoring and learning in remote settings, or on the other hand, a lack of supervision brings potential for errors related to things like work quality and communication, other potential errors can occur from lack of oversight of the junior employees. Basically, risk management controls may be more challenging to implement and monitor in a remote environment. Artificial Intelligence or AI is an interesting one. AI is reshaping how all industries work, and an interesting development is the use of AI and professional services. The areas where AI are most prevalent include lawyers, real estate agents, accountants and construction professionals. In a recent report, 79% of legal professionals have adopted AI in some way, and it can provide significant efficiency and cost savings, helping automate routine tasks such as legal research and analysis, document management and billing. We just need to be aware that proper training must be introduced in works that require AI and other technologies and generative AI in particular, should not compromise confidentiality. According to the World Economic Forum, 92% of generative AI users who said their employers have aI data. Guidelines also said they have leaked company data. More than 40% of employees said they have seen incorrect generative AI outputs, and almost half said they use generative AI provided facts or recommendations to make decisions without review of others. And the construction industry. Encompasses a number of different businesses and professions like Andre mentioned before, architectural firms, engineers and building contractors, just to name. Some rising building costs in recent years has meant that the payouts for Eno related claims have gone up, and settlements and defense costs have also gone up, and in turn, carriers are eliminating their capacity or raising premiums, or both for, you know, coverage, forcing construction related businesses to pay more for just the same coverage they had a few years ago. Sorry to touch on the brokers. You know, again, there has been an increase in, you know, claims against insurance agents. The insurance landscape has become increasingly more complex and specialized. The likelihood of making a mistake has become even greater. Insurance Agents are expected to know such a wide range of coverages, such as property, casualty, cyber specialty lines, which can potentially create day to day issues.
 

Laura Marcantonio  00:46:10
That was it for the slides.
 

Nicole Panteloucos  00:46:15
Awesome. Thank you so much, Laura. Now we're going to turn to the question and answer portion of the webinar. So first question I have is, what factors impact brokers when it comes to Eno, exposures and liabilities, and how can brokers protect themselves from, you know, claims made against them?
 

Laura Marcantonio  00:46:36
Okay, thanks for that. I recently read an article that basically said, there's been a rise in cases where carriers are rescinding policies for application errors and fraud, and these are situations when there's an E no claim against the agent. The standard of care for agents is to ensure their responsibility to the carrier as well as their clients, so that the application, you know, ensure that it is correct. There's also been a number of claims against agents for a client that is under insured or does not have the appropriate appropriate coverages. So of course, work with your underwriter and your colleagues if you are unsure of the exposure.
 

Nicole Panteloucos  00:47:24
Fantastic. Thank you, Laura. And next question I wanted to ask is, what kind of regulations are there that could affect PL exposures?
 

Laura Marcantonio  00:47:36
Yeah, so we touched a bit on the regulations of the professional bodies there most professional regulatory colleges and governing bodies mandate that their members carry professional liability insurance. I think I'll just give one example for the sake of time and discuss the Law Society of Ontario. The Law Society's authority to license and regulate lawyers and paralegals is in the public interest is granted by the Ontario government through the Law Society act and regulations made under the Act the LSO sets out the professional and ethical obligations of lawyers and paralegals and the manner in which they are regulated so lawyers and paralegals who fail to meet these standards are subject to complaints from their clients and regulatory processes. The body might also require them to do annual training. It's quite similar with alternate regulatory authorities. But if you want to know more, you can reach out to me and we can get more into specifics.
 

Nicole Panteloucos  00:48:45
Great. Thanks again, Laura. And also wanted to ask, what are some more risk mitigation strategies for you know,
 

Laura Marcantonio  00:48:54
so other than the strategy, I think had four on that screen, some others I can think of would be avoid creating unrealistic client expectations or effectively guaranteeing a highly favorable outcome. Um, this is just going to avoid any potential um guarantees that a client is anticipating and that could potentially lead to an email claim and use an efficient calendar system to alert deadlines or meeting schedules. For example, law firms use docket control systems and conflict of interest systems as well.
 

Nicole Panteloucos  00:49:43
And just checking out some other questions from our audience members here, I can see one that says, What if the insured makes a mistake by error? Does insurance cover this related to the ENO claim?
 

Laura Marcantonio  00:50:01
If they make a mistake by error?
 

Nicole Panteloucos  00:50:05
Yes,
 

Laura Marcantonio  00:50:06
Okay, well, yes, everyone makes mistakes. So typically, that's what you know. Coverage is there for, is for any errors made on part of the professional Andre any anything else to add to that?
 

Andre Linsky  00:50:22
Yeah, I'm not sure I understand the question, did you see if the client makes a mistake?
 

Nicole Panteloucos  00:50:32
If the insured makes a mistake by error.
 

Andre Linsky  00:50:36
Oh the insured? Yeah, yeah, obviously, yeah. It's, it's normally covered, as long as it responds to the definition of what's covered under the policy. But usually simple mistakes are covered.
 

Nicole Panteloucos  00:50:48
Thanks. Another question we have coming in from our audience is, as a professional accountant and a life insurance agent, I already have mandatory, you know, required by CPA and insurance Council, do I still need extra e no policy coverage,
 

Laura Marcantonio  00:51:06
So the CPA of Ontario will regulate I believe it's 1 million per claim and 2 million aggregate limits of liability that you're required to carry. It depends on the size of the files you're handling, this is like the revenues of the clients you're doing taxes for. There are many, many CPAs, which will look for excess limits of insurance to carry a higher limit of liability to protect themselves, and that is available within the market.
 

Nicole Panteloucos  00:51:45
Thanks very much, Laura. And next question, someone has written. My client is a yoga freelance tutor, self employed. She's looking for renting space from someone's office after office hours to teach people two evenings, weekly, she is asked to show insurance coverage to use the space for students, injury, damage, etc. Which type of insurance should she go for? GCL or, you know,
 

Laura Marcantonio  00:52:15
So yoga instructor. I don't know so much on the GL side, but they would require, for, you know, medical malpractice policies, probably the best suited for any you know, in the while they're teaching the students, if there's any injuries that occur And they sue the instructor that would be covered under event mal policy. There might be some sort of coverage required if you're leasing the location, but Andre correct me, if I'm wrong, that's that's more like a property issue,
 

Andre Linsky  00:52:55
Yeah. So, so the CGL policy, again, I'm not an expert in that field, but the CGL policy will seek to cover, example, if somehow the yoga instructor ignites a fire in the in the place, and burns the place down, but, or maybe for some sleep and fall exposures, but most of the exposure will be, you know, though, from the instructor towards the students, so you may need both.
 

Nicole Panteloucos  00:53:24
Good thank you Andre and very last question, what are the top one to three types of you Know, claims against Investment Advisors?
 

Laura Marcantonio  00:53:36
That's a loaded question. Yeah, we might have to take that offline and coordinate with our claims adjusters. I want to give the proper information so maybe we can get back to you on that one.
 

Nicole Panteloucos  00:54:01
Well, this does wrap up the Q&A portion of the webinar. So I just wanted to say Say thanks so much again to Andre and Laura for their insights and expertise, and to everyone in the audience for joining us today, and be sure to keep an out for upcoming webinars and enjoy the rest of your day. Thank you both so much.
 

Andre Linsky  00:54:16
Thank you.
 

Laura Marcantonio  00:54:19
Thank you.