Seventy-three percent of independent insurance agencies saw an increase in their agency errors & omissions renewal premium in 2024, according to Insurance Journal's annual “Agency E&O survey," which polls buyers of the coverage on pricing and market trends. This is up from 2023, when 64% of respondents saw increases in their E&O renewal premiums, and 2022, when 71% reported increases.

Moreover, premiums are expected to continue to increase. The survey found that 69% predict another increase at their next renewal, which is slightly higher than 66% in the 2023 survey and level with the 69% of respondents in the 2022 survey.

Almost half (47%) said the increase came from a rate increase from the agency's E&O carrier, while more than a third (38%) said the increase in premium was due to agency growth, expansion or acquisition.

Only 6% said the increase was due to the agency's own claims experience, while just 4% reported the increase was due to changes to underwriting risk factors other than growth. Some 4% noted the increase in premium was due to changes in their policy, such as higher coverage limits, which is down from 8% who reported higher coverage limits as the reason for an increase in the 2023 survey.

Also, 39% of respondents reported a recent change to agency E&O policy deductibles, which is down from 53% of agencies reporting changes in the 2023 survey.

However, “the number of carriers willing to provide $10 million E&O limits is shrinking," says Laura Gookin, senior vice president at Berkley Service Professionals. “Most are setting limits of $5 million, and deductibles are increasing with individual restrictions that vary by insurance provider and agency."

The key to obtaining coverage is a documented risk management plan. At a minimum, the plan, implemented with management oversight, should include a checklist of how agency staff should execute various processes.

“Insurance providers want to know that the agent has documented client interactions, especially when the insured declines or reduces coverage, to eliminate accusations of negligence for failure to advise the client properly," Gookin adds. “Perhaps most importantly, agencies need to keep their insurance providers informed of any material changes. This includes the addition of new products, location changes, acquisitions and significant new hires."

Will Jones is IA editor-in-chief.