Errors and Omissions Liability Insurance
What is Errors and Omissions Liability Insurance?
Errors and omissions (E&O) liability insurance (also known as professional liability and sometimes professional indemnity) is a client-facing liability risk impacting service providers. The level of risk and exposure depends on the nature of the work, the type of client and the location of the activity. Importantly, the risk generally still exists despite applying all available risk control strategies – and requires specialized risk financing treatment.
Why is E&O Liability Important?
Unless systemic issues exist in the business, the risk is generally characterized by low frequency and high severity/impact. This means that while the risk can potentially create a material financial impact on a business, prior experience with the risk is often limited, and actionable information to guide risk management and financing decision-making is difficult to obtain (and of great value).
For regulated service providers and particularly professional service firms, the risk is elevated and of paramount importance – having the potential to create severe financial impact and reputational damage. For law firms, accounting firms, consulting firms and design/construction firms, managing and insuring their exposures is a key way to protect their reputation and revenue.
How Aon Can Help
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Insurance Broking
We tailor coverage and arrange insurance around a business’ specific needs – and across all types of errors and omissions liability risk (and when coverage needs to be blended with other insurance lines). Our reputation and access to markets give us the ability to manuscript policies with broad policy terms and conditions. This also enables us to advocate for our clients in the claims process and look to obtain the optimal outcome.
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Claims Advocacy and Resolution
While many insurance claims move efficiently to a full and final settlement, there are some instances where additional strategic and technical knowledge is needed to ensure a fair resolution for clients. This is especially true when claims are complex or include significant financial losses that might be hard to value. At Aon, our claims advocates are able to escalate claims to decision-makers and relevant stakeholders and leverage their experience to drive toward swift and fair resolutions.
We bring specialist experience to all aspects of the claims process, including the selection of adjusters, partnerships with law firms, and formal escalation protocols with insurers.
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Loss Prevention (for Law Firms)
Identifying and avoiding or minimizing liability and professional responsibility risks is critical to law firms. Even where allegations against a firm are found to be groundless, or the amount involved is relatively insubstantial, a firm’s or lawyer’s reputation may be compromised, or a client relationship jeopardized. Aon has dedicated loss prevention specialists for law firms in the US and UK. Our team includes former partners in large law firms with years of experience in loss prevention, legal ethics, and professional liability law.
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Actuarial Risk Analysis
Our actuaries work with firms to understand and satisfy their risk modeling and loss forecasting needs, providing risk pricing and loss reserving in support of captive insurance financing. The actuarial risk modeling can be used to estimate costs associated with different retentions and limits to help tailor a (re)insurance program to match the loss profile of the business.
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Benchmarking and Data Analytics
In an increasingly competitive business environment, it is important to understand the performance of your insurance program. Aon can use its knowledge of the market, available program structures and pricing to provide a wide range of benchmarking analyses and analytics to support better risk management decision-making.
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Global Compliance
The regulatory and contractual obligations of service providers are constantly evolving. For global businesses, local regulations and contract requirements differences can put firms at risk of regulatory and contractual breaches. While Aon does not provide legal or regulatory advice, we work with our clients to ensure they have cost-effective compliance measures in place at a local level.
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Product / Service
Claims Advocacy
