All it takes is one–just one dissatisfied customer–to place a business, career and personal assets at risk.

Those in the business of delivering professional services live with the constant risk that their work will not meet a client's needs or expectations. But, in some cases, losing a client may be the least of the problems they will face.

In today's extremely litigious society, just one lawsuit can mean ruin for a professional business and, worse still, a reputation. And it may not matter if the lawsuit has legal merit. Many do not.

Some legal claims aren't based on an alleged professional error but simply a client's displeasure with results.

As is often the case, however, out of turbulence comes timely opportunity.

THE MPL OPPORTUNITY

Miscellaneous professional services liability insurance, or MPL, which protects customers against losses from the rendering of–or perceived failure to render–their professional services, presents a significant opportunity for independent agents to grow their commercial lines businesses.

Unlike standard professional liability, which commonly covers more heavily insured businesses such as medical practices and law firms, MPL–also known as errors and omissions liability–is available for a wide range of business classes with professional liability exposures, including advertising agencies, travel agents, event planners, business and management consultants–even insurance adjusters. This may include actual or alleged acts of fraud, malpractice negligence, misstatements or misleading statements.

The opportunity around MPL is characterized by three market trends:

o Growing Use Of Consultants

An increasing numbers of consumers and businesses are choosing to rely on a wide variety of professional services and consultants. As more and more of these consultants are honing in on their best skills to create very specialized services, they often outsource work to other specialty consultants.

This, in turn, creates more professional services companies overall and more risk for the consultant initially contracted by the client because they are now partially relying on an outside party to meet the needs of their customers.

o Coverage Lacking

An estimated 79 percent of the small businesses within the miscellaneous professional classes currently do not carry MPL coverage, according to Market Stance data, a leading resource for insurance market and business demographic statistics.

These business owners either do not fully appreciate their risk exposure, mistakenly think that professional errors and omissions exposure is covered under general liability coverage, or simply aren't aware that affordable MPL coverage is available to protect their assets.

o Ripe Targets

Regardless of the kind of practice, professional consultants are increasingly the target of client claims and lawsuits. Whether they are frivolous or fair and reasonable, the cost to defend against such a lawsuit can be extremely damaging–even crippling–to a small professional services firm.

With that in mind, carriers that are making investments in their commercial lines business to include miscellaneous professional liability in their total account solutions have caught the attention of more and more agents. And agents who once overlooked this business are now focusing more time and attention on MPL as a way to help build and grow a lucrative commercial lines operation for their agencies.

CHALLENGES OF SELLING MPL

Because not all carriers offer MPL, agents either have had to personally research and identify a different market for this type of coverage, or have relied on a broker to fill the gap.

Furthermore, the coverages provided on carriers' policies often vary, making it difficult for agents to determine that the appropriate coverages match their particular client's needs.

All in all, these obstacles often required agents to spend a lot of increased time and effort to produce a quote, compromising the delivery of prompt, accurate service.

Even for those agents who invested the time and energy to help solve a customer's problem, most carriers offered MPL coverage only as a stand-alone policy, with $1 million being the lowest limit of available coverage and minimum premiums typically between $2,500 and $10,000.

As a result, agents had a formidable job simply convincing their small professional services customers that the cost was truly justified–despite the enormous importance of MPL coverage to the safety and stability of their business.

The market is changing, however.

With great opportunities created by the trends described above, more and more carriers are entering the MPL market, and existing players are demonstrating renewed interest in the coverage.

Such carriers are making the investments required to meet all of an agent's commercial lines needs, including business owners' policies, package policies, commercial auto, umbrella, marine and bond products.

As a way to expand their total account capabilities, these carriers are structuring new MPL products as endorsements to standard Business Owners Policies, with lower coverage limits and more affordable pricing.

This type of endorsement product effectively opens up the market for independent agents and helps them to better serve customers for whom MPL coverage is an absolute necessity. Lower limits and significantly lower premiums make it much easier to cross-sell MPL coverage, or to include it as part of a total account solution for the client, which, in turn, improves customer retention.

In addition, as an endorsement to a standard BOP, this type of MPL coverage is easily integrated into a carrier's online agent tools, making it faster and easier to generate a quote, which translates into improved service and customer satisfaction.

RELATIONSHIPS, RETENTION AND GROWTH

Looking forward, agents interested in growing their small commercial businesses would do well to consider the opportunity in MPL.

Small- to midsized businesses serve as the economic backbone of any community. To the degree that an agent can meet the unique and unmet needs of professional service companies with this important coverage, they also will help ensure a strong and stable local economy.

Working with carriers that offer total solutions including MPL, and that are prepared to support the sales process with the people, products and technology agents need, will ultimately help agents enhance customer relationships, retention and growth over the long term.

David J. Firstenberg is president of commercial lines for The Hanover Insurance Group in Worcester, Mass.

Special Reports /

MPL Market Opportunity Growing For Commercial Lines Insurance Agents

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