In the September 2001 issue of American AGENT & BROKER, we attempted to forecast the future of insurance agents errors and omissions insurance ("Agent E&O Renewals: Don't Wait Until the 11th Hour"). We foresaw the hardening of the market but never expected it to get as bad as it was in the mid-1980s. Now the market is settling down, and we sense a change taking place once again. To better understand where we are now, let's begin with a brief overview of what has transpired during the past three years.

The hardening of the insurance agents E&O market, which began in 2002 and continued into 2004, accelerated when two insurers with significant books of business exited the market. Those two carriers had non- renewed over $40 million in agents E&O business, and the few remaining markets in that niche also became more selective when underwriting their own books of business. We saw new exclusions used to tighten policy language, reduced limits, withdrawal from certain sizes and classes of business and, of course, significant premium increases. MGAs and wholesalers were viewed as poor risks, just as they were in the mid-1980s, and many were lucky to get coverage at any price, on any terms. Underwriters typically had more business than they could handle and found it easier to non-renew entire classes than to underwrite individual risks.

Standard Main Street brokers often were able to renew with their existing carriers, although at higher prices. While some insurance professionals complained about pricing and tried to get a better deal, they quickly learned that, even with a double-digit increase, they still got good quotes, relatively speaking. A small percentage of agents, oblivious to the hardening market, sought more coverage at lower prices. A few panicked and heavily marketed their renewals, sending applications to multiple brokers and/or markets. For example, one account was submitted to us by seven different producers. The agent did himself a disservice, though; we could hardly take seriously one small account coming in from seven sources.