Advocis conference update: Advocis announces in-house E&O program

(May 27, 2004) Advocis members should see a much improved errors and omissions insurance (E&O) plan by April 1, the next renewal period, thanks to the launch of a new independent association that will oversee E&O development, association officials say.

“A strong marketplace demand has driven Advocis to work on this innovative errors and omissions plan that will be more reflective of the needs of its plan holders,” said Advocis president Steve Howard. “This initiative is predicated on the principal belief that professionals should have a role in shaping and managing a product that is so vitally important to their practice.”

The Advocis Protective Association (APA) is made up of seasoned members who will work with insurers and brokers to create a product that meets the specific needs of advisors, says committee member Floyd Murphy, owner of Murrick Insurance Services in Vancouver. In the past few years, it’s been difficult for advisors to get appropriate coverage, he notes.

“To develop appropriate E&O coverage, you have to be close to the industry,” Murphy explains. “A third party [insurer] doesn’t necessarily know what all the risks and issues are to advisors.”

Getting stable coverage at a realistic price is another issue for advisors, Murphy notes. “The premium has to be appropriate to the level of coverage but at the same time, it can’t be distorted by some third-party event that has nothing to do with our practices, such as 9/11,” he says.

Other committee members include advisors Lawrence Geller and Gary MacLeod. John Martin will lead the new association. “What you have is effectively a plan operated by its members,” Martin said. “It’s a case of big being better, particularly where a plan of this nature is concerned.”

Martin says the APA may also pass judgment on E&O claims before they go to the insurance company, similar to how it works in the medical profession.

Through seminars, APA will address best practices so advisors hopefully won’t find themselves having to file an E&O claim in the first place. “In nine out of 10 cases, it was just an oversight or mistake [on the advisor’s part], so if we want to show advisors how to avoid these oversights,” says Murphy.

More details of the new plan — which will involve current Advocis E&O broker Aon — will be released later this year.

Filed by Deanne N. Gage, Advisor’s Edge deanne.gage@advisor.rogers.com