Staying Connected Can Be Hazardous

In today’s litigious environment, if you’re an agent and the insurer you represent becomes insolvent, you could be subject to lawsuits from policyholders — your clients — claiming you placed their coverage with a carrier that became insolvent. If that happens, don’t be surprised if your Errors & Omissions policy will not defend you against this potentially serious exposure. You could be saddled with the cost of paying for your own legal defense or hit with a big-dollar settlement. In any case, your reputation would suffer, something no agent can afford.

Fearful that a giant storm or a series of hurricanes could cripple the Florida Hurricane Catastrophe Fund (Cat Fund) this year and lead to huge assessments, the trustees of the fund in July made an extraordinary decision to pay $224 million now to secure a guarantee from Berkshire Hathaway that the Nebraska-based conglomerate would buy $4 billion in bonds in the event that the amount of storm losses reach $25 billion.