6/29/2020 - Action required: Informative- The E&O environment and PGI.

6/29/2020 - Action required: Informative- The E&O environment and PGI.

PGI Agency Owners,


PGI and PGI agencies have an astounding E&O track record. With over hundreds of thousands of clients and millions of transactions at an aggregate level, we have only ever had 1 claim pay out indemnity for an agent error. This is a powerful stat/ variable when we go to market annually. It suggests you are following the best practices you have learned perhaps in a prior insurance life and that you too are following the E&O best practices as prescribed by PGI. 


  1. Standard of Care: Options, Consultations, Customer Privacy
  2. Transaction Documentation and retention
  3. Customer Follow-up
  4. Agency Processes (Audit your processes)
  5. Annual Reviews


We have an incredible E&O policy and company that the industry admires as a leader in the E&O market place.   


The PGI E&O policy is reviewed, negotiated, and remarketed annually, with a renewal date of June 1st. This year that process was more intense and protracted than ever, given the new market conditions within the E&O environment since the onset of Covid. This communication today is to provide transparency and detail some of those changes in the E&O market so you are aware of what the E&O market fears most right now and how you can prevent those fears from occurring within your own agency.


With headlines that read, Broker E&O underwriters bracing for wave of Covid-19 claims” or When Insurers Deny Claims, Brokers Are Next in Line for Allegations of Wrongdoing”; it goes without saying that the E&O industry is preparing for lawsuits to pass from the carrier to the agency, when Business Interruption  (Or other coverages) is not found within the policy. The industry expects that the agency will then need to defend* their practices of Documentation, defined Processes, Providing options and consultation, and defining appropriate Insurer, Insured, and Agency responsibilities. (* Defense is an E&O Coverage) “When insureds realize there is no coverage in their policy for BI they will pivot and look to their retailer and claim that they failed to provide them with the appropriate coverage.” “In the wake of government orders shutting down or seriously limiting the operations of businesses to deal with the COVID-19 outbreak, many affected businesses have turned to their insurers for coverage. This has led to a flurry of lawsuits across the nation seeking rulings that such claims are covered and asserting that the failure to accept such claims constitutes breaches of contract, bad faith, and other common law and statutory violations. Perhaps anticipating that courts may find these purported losses not covered under applicable policies of insurance, plaintiffs have begun to look elsewhere for relief, including to insurance brokers, as demonstrated by three recent lawsuits: Sean Boutros, M.D., P.A. v. Sentinel Insurance Co. Ltd., John’s Grill v. The Hartford Financial Services Group, Inc., and Ybarra Investments, Inc. v. Scottsdale Insurance Company.”


When the Industry can see or predict the rise in claims/ losses on the horizon, we can expect: 

  • Increased rates
  • Underwriting with intensity
  • Removal of coverages 
  • Increase deductibles (More Risk sharing) 
  • Leave the market for a time (Hard Market)
  • Many other actions. 


And like clockwork, the industry has done just that.  “With the pandemic, I've seen carriers pulling out of the market, non-renewing, increasing rates another 10% and more, and not willing to provide the coverages and limits they did just earlier this year.  Most is driven by anticipated claims.”


What does this mean for PGI Agents? We have procured coverages and definitions we desire to have included in the E&O policy to cover you, your agency, and your exclusive employees and contractors as long as you are using carriers PGI provided (It should always be that way) and you are acting under the definition of “Professional Services” as defined in the E&O policy.


It also means that despite the industry paying dramatically higher premiums on renewals and increasing deductibles ranging from $50,000 - $100,000 per occurrence, PGI has seen only a moderate increase in the E&O premium and a comparatively reduced deductible change from $10,000 to $20,000 per occurrence up to a cap, while negotiating for increased limits and a more broad definition of Insured. (There have been other minor coverage tweaks)

Although you most likely will never have a need to use your E&O coverages, it is imperative we reiterate the mandatory steps you must take so that you can participate in what has always existed at PGI: Deductible sharing (Which is to your benefit) 

Our next communication will detail information for a mandatory conference call to help you prevent E&O losses and secure your book value (There will be many you can attend so that you can find a time that works best for you). We will detail best practices you must do to ensure you can share the deductible with PGI in the unlikely event you need to use the PGI E&O policy.

Please take great pride in what you have accomplished. In aggregate, only one indemnity claim paid to date, in over 20 years of doing business. With the appropriate light and attention shinning in the topic of agency practices, we can strive to overcome trends and go 20 more years without another claim. 


Referenced articles:






Shawn Michael Walker

Vice President

720-457-0203 (office)

720-335-3799 (cell)

866-948-8485 (fax)


www.thinkpremierfirst.com www.pgiagents.com



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