The simple answer is that any line of business, if not handled properly, has the potential to generate E&O claims. The statistics can certainly vary based on the type of agencies that the E&O carrier writes. For those E&O carriers that try to focus on primarily personal lines agencies, obviously a specific personal line of business is going to be the main culprit and conversely for E&O carriers that write primarily commercial business, then a specific commercial line of business will be the issue.
Within the personal lines arena, it appears that year after year, homeowners is the main line of business generating probably close to 60% of all personal lines E&O claims. For many veteran personal lines staff, this is probably not a surprise as there are a wide range of issues involving homeowners including valuation, limitations, etc. Auto is second and typically personal umbrellas are third. Then there are the remaining lines of business including floaters, watercraft, etc.
Within commercial lines, the number one line is commercial liability followed by commercial property. Certainly within commercial lines, the issues tend to be more complex, there is less standardization of the forms, and the limits are more significant. Ironically, while commercial liability is the line most often involved in E&O claims, when it comes to the dollars that are spent to settle the cases, commercial property claims the number one spot. Once again, values are higher and actually improper valuation tends to be one of the main issues.
Workers Compensation is traditionally third. For many, this is a major surprise with workers comp a mandatory coverage for most commercial accounts. Professional liability is a line of business that surprisingly does not generate a lot of E&O claims. The reason it surprises me is that no two professional liability policies are the same with some major variances among the policies. This lack of standardization is definitely an issue especially when moving an account from one carrier to another. While professional liability does not generate much in the way of claim activity, when a claim occurs, they tend to be very large, oftentimes in the $5mil arena. Thus for agents writing professional liability, a look at your E&O limits might be in order.
We can’t forget about benefits as they do tend to generate some E&O activity, although the numbers are lower. This area includes primarily life and health. Actually life insurance through the years has generated more than a handful of E&O claims.
So, regardless of the type of insurance your agency writes, virtually every line of business has the potential to generate some E&O activity.