Click here to complete our contact form, or call 866-759-0102. If I cannot take your call, you can leave a private voicemail, and I will get back to you as soon as possible. I look forward to speaking with you soon.

Bruce R. Swicker

ACCOUNTANTS, including CPA's, Public Accountants, Enrolled Agents, Bookkeepers & Tax Preparers

Professional liability insurance protects accountants against claims arising out of their advice, and the work product they produce for their clients. Most of the headline-grabbing news about accounting malpractice involves major national firms. However, firms of all sizes frequently find themselves the subject of a malpractice claim. Remember that regardless of the merits of a claim, it must be defended, the cost of which can be staggering, even if it is ultimately found that there is no wrong-doing on the part of the defendant.

Accounting malpractice claims on the rise . . .

The number of malpractice claims against CPAs and other accounting professionals is increasing. Jury verdicts rose dramatically over the past ten years. Even a smaller or midsize firm faces a significantly increased risk of a professional liability claim. Firms that might handle only compilation, review or non-audit services, or tax or business management issues for businesses or individuals, can still be sued.

A common misconception we hear from accountants is, “We don’t handle audits, so we don’t need malpractice insurance.” In fact, statistics demonstrate that over 50% of all accounting malpractice claims arise over tax issues. It is true that audits of either public or private companies can result in greater exposure in terms of the damages alleged by the plaintiff, and thus these cases grab the headlines. However, tax engagements present the biggest liability exposure for most smaller-to-midsize accounting firms.

Even if the accountant has done nothing wrong, the cost of defending the claim can be devastating. Malpractice defense attorneys expect to be paid regardless of the circumstances and regardless of the outcome. In addition, accountants who are sued lose many billable hours in order to devote time to their defense.

Prudent CPAs and accounting firms of all sizes understand the value of accountants' professional liability insurance. More and more accounting firms turn to an experienced, knowledgeable, independent insurance broker for their coverage. Earhart Leigh Associates represents several outstanding markets for this coverage, providing our clients with a variety of choices, depending upon their exact needs and the nature of their practice.

A word about "endorsed" programs . . .

The truth is that many insurance programs offered through professional societies and other organizations receive the "endorsement" simply as a result of fees paid to the organization by the insurance carrier or program manager. While it is true that some programs offer reasonably good coverage, they are generally "slot underwritten.” This means that there is very little customization available. Slot-underwritten programs offer very little flexibility in coverage terms and pricing to match the unique practice profile of each individual firm or professional. It also means that your firm's pricing is often a result of the overall experience of the program.

Bottom line, do not assume that simply because you obtain your insurance through an endorsed program that you are necessarily getting the best or most cost-effective coverage options for your particular situation. At Earhart Leigh Associates, we work with many different programs and carriers, and we would be happy to assist you with a comparison of your present coverage - without cost or obligation - to help you make the best choice.

We can handle the difficult or unusual coverage situation . . .

As a truly independent brokerage firm, Earhart Leigh Associates’ highest priority is to represent you! We work on your behalf to put together the most appropriate coverage terms for your firm’s practice profile. Even if you or your firm has had your professional liability insurance cancelled or non-renewed due to claims experience, regulatory or disciplinary actions, or any other adverse situation, we can help! Even if your firm practices in potentially high-liability areas of practice, we can help! Even if you only handle routine individual tax preparation or bookkeeping, we can help!

Whatever the size of your firm, whether it’s a general practice or one highly focused on one particular practice specialty, Earhart Leigh Associates offers the expertise, independence, market access, and underwriting relationships to provide you with the broadest possible coverage at the most competitive pricing possible!

Give us a call today—let’s talk.

Contact

Robert O. Link, Jr.

212 504 6172

robert.link@cwt.com

Latest updates; random thoughts . . .

AUGUST, 2010

What’s up in New York State? Is there something in the water? Why are so many insurance companies so anxious to write New York lawyers professional liability (“LPL”) insurance? No kidding, just this year – so far – about a half dozen carriers have either entered the New York market, or have filings awaiting approval by the NYS Insurance Dept.

To my knowledge, only a single, small, non-admitted carrier has withdrawn a program from the state, though that same carrier is in the process of acquiring another, licensed and admitted carrier which have an active LPL program.

In fairness, I should also point out that a couple of major insurers have instituted significant rate increases, which can only indicate that they have not found New York to be terribly profitable. Of course, there is an old saying in the insurance industry, “There’s no such thing as a bad risk; only insufficient premium!” One of these national carriers has been underpriced for years, and while this makes it easy to grow top-line revenues, it inevitably leads to bottom-line losses.

So, back to my original question: What is it about New York State that makes it appear to be the Holy Grail for legal malpractice insurers? True, there are a lot of attorneys throughout the state, which means that there are plenty of opportunities to write business. However, I am not aware that the overall number of attorneys is growing, so each opportunity to write new business means that it is probably taking that business away from another insurer. Also, while New York’s litigation environment for legal malpractice defendants is far better than, say, New Jersey, it’s no cakewalk.

Of course, the law of supply-and-demand inevitably means that with all of the market capacity competing for business, obtaining adequate pricing becomes a key issue. Indeed, it is tempting for insureds to look only at pricing, but the reality for any knowledgeable insurance buyer is that market stability is important. It is not in anyone’s benefit over the long term to have carriers come into any market, underprice a risk that they may not entirely understand, and then run-for-the-doors when the losses roll in.

The key challenge for insurance brokers – particularly those who specialize in placing legal malpractice insurance, as we do at Earhart Leigh Associates – is to assist our clients in navigating the tricky waters of a crowded market. This means doubling our efforts to stay on top of market developments, monitoring rumors (some of which turn out to be true), evaluating policy forms, and maintaining on ongoing dialogue with underwriters. This is, after all, how we demonstrate to our clients the true, long-term value of working with a specialty insurance broker!

If you have thoughts or comments, please let me know, bswicker@earhartleigh.com.

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