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In most professions, the generalist, the so-called “jack of all trades,” has become an endangered species. TV’s kindly general practitioner Dr. Marcus Welby could treat everything from a hangnail to a hematoma. He has been replaced by caustic Dr. Gregory House, with a huge supporting cast of highly specialized interns, each of whom sees the patient’s symptoms through the myopia of his or her area of expertise.Neither Dr. Welby’s nor Dr. House’s TV patients ever receive a bill for services, but in real-life professional offices, including insurance brokerage firms, we are running a business while practicing a licensed occupation. The natural desire to be helpful, as well as the financial incentive to increase revenues, can tempt brokers and other professionals to stray outside their areas of expertise, but doing so can lead to increased risk for the broker. The temptation is especially strong in an economic downturn and a soft insurance market, when premiums and commissions are unlikely to remain stable, let alone increase.A fish storyLet’s say “Sam the Broker” has been the producing broker for a local seafood restaurant, Joe the Fishmonger, for several years, and procuring the general liability, employer’s liability, workers’ compensation and business auto policies to Joe and his shop. One day Joe calls Sam: “I’ve got this great opportunity to start importing sea urchins in bulk from Argentina and reselling them to restaurants throughout the area. Am I covered for it?”Not wanting to appear uninformed or to lose a potential business opportunity, Sam tells Joe, “That kind of international business can pose different risks. You’d better let me look over the proposal so we can decide if you need expanded coverage.” Sam later assists Joe in getting broader coverage for his new urchin importing venture, and Sam earns increased commissions on the newly placed coverage. Joe is a happy customer–until two years later when an earthquake destroys the Argentine urchin-processing dock, bringing the urchin trade to a sudden halt. Joe’s business takes a nose dive, and he is surprised to learn from his insurer that he has no coverage for a business interruption caused by an earthquake loss in a foreign country.The sad tale of Joe the Fishmonger is loosely based upon a real case I defended some years ago, with the names, locations and line of business changed. Sam the Broker didn’t really have the experience to procure coverage for the esoteric kind of risk posed by Joe’s urchin importation business. Sam wanted to keep his client happy, and not to let another brokerage, one experienced in business interruption insurance for businesses with international suppliers, get between Sam and Joe.The moral of the story is a simple one: Stay within your strengths.We have our standardsThe general rule in professional liability cases is that one who holds himself out as an expert in a particular, specialized area of practice will be held to the standard of care that applies to real experts in that area. That principle may not be surprising. Few of us would be pleased to learn that a medical doctor who told us that she was a board-certified brain surgeon did not really have that certification, after we went under the knife in reliance on her representation. In the insurance world, the licensing and certification standards are not as specific as they are in medicine. In contrast, with some exceptions, a licensed property-casualty broker doesn’t need a set of specialist’s initials on his or her business card to place any form of property-casualty business with an admitted carrier.In general, the insurance-buying public does not look at the diplomas and industry association memberships on brokers’ walls as closely as they might scrutinize a surgeon’s qualifications. A patient might ask, “How many surgeries like this one have you done before?” In the case of Joe v. Sam, Joe didn’t ask Sam if he had procured coverage for a sea urchin importing business before. Joe took the fact that Sam proceeded to make the placement as sufficient evidence that Sam considered himself competent to do the job. In many broker E&O cases, the alleged “misrepresentation” of the broker’s qualifications is not made affirmatively–”I am an expert in procuring shellfish import insurance”–but by implication. The general rule used by courts and juries is if you take on work that requires an expert’s knowledge, you are held to an expert’s standard of care. In other words, it is not a complete defense to say, “I only dabble in that area, so I should be held to a lesser standard.” Dabblers are usually held to the same standards as full-time specialists.What is the “expert” standard of care? In areas outside of the lay juror’s experience, that standard is determined by the jury with the aid of expert witnesses paid by both sides of the case. Observers of the U.S. legal system find the use of paid experts to be one of our more perplexing practices. In some other systems, expert witnesses are called, if at all, by the trial judge and are not paid by any party. Science fiction icon Arthur C. Clarke could have been describing the U.S. civil justice system when he wrote, “For every expert there is an equal and opposite expert.”Although expert witnesses are not all equal in qualifications or in persuasive skills, there is certainly no shortage of them. One organization of expert witnesses, the Forensic Expert Witness Assn., lists 13 experts under the heading “insurance broker.” There are many such organizations, and many more experts who work independently from any organization. I googled the terms insurance broker and expert witness together and received 16,100 hits.It used to be said that medical doctors refused to testify against each other as experts–the so-called “conspiracy of silence.” That particular professional courtesy evaporated long ago. In my experience, there never was a similar reticence to testify among insurance professionals. It is fair to say that in any broker E&O case, even the one you think is the clearest slam-dunk defense winner, the plaintiff will be able to find a qualified “expert” who will gladly testify that he or she is “shocked” by the defendant’s breach of the professional standard of care. It is up to the lay jury to determine the standard of care, based upon the battling experts’ contradictory testimony and the jurors’ collective take on the experts’ relative credibility.Some tips on expansionThere are ways for small- to medium-size brokerage firms to expand into new areas of expertise, and while none of them are riskless, they entail less risk than claiming to have experience that the firm actually does not.One way to expand is education. We all learn new skills in our professions, and sometimes we even reinvent ourselves to meet a changing marketplace. The insurance industry has many resources to help certify brokers and agents in numerous specialties through organizations such as the Insurance Educational Association, Professional Liability Underwriting Society and AICPCU. (Full disclosure: I am on the Board of the IEA, and have chaired three national PLUS education events, so I admit my partiality to those organizations.) Receiving a new certification, plus a little hands-on work with the guidance of an experienced mentor, can blunt the plaintiff’s accusation that you were swimming out of your depth.Another way to expand a professional practice is by bringing in new people who have needed expertise, either as permanent staff or on an ad hoc basis. One cautionary note: When adding an experienced broker to a firm, especially one who brings in existing business, it is important not to buy an unfair competition lawsuit by his or her former employer, along with that new expertise and business.There also is the option that Sam the Broker refused to consider in the tale of Joe the Fishmonger–referring the customer to an established expert for the exotic lines of coverage, while maintaining the existing relationship on the vanilla coverages. Yes, there is a risk that the sea urchin import insurance guru will try to woo Joe away as a client for all of his insurance needs. That is how some people in today’s business world return a favor, but the smartest professionals recognize that a referral is not an invitation to become a poacher. If you do refer, consider asking the guru for references from other producers he or she has worked with. What do they say about letting her near their customers?We all have our strengths, and we succeed best when we play to them. In my legal practice, I defend financial professionals and handle insurance coverage assignments. If someone asked me to defend a serious personal injury case, I’d introduce them to my partners who are great personal injury defense lawyers.There are very few generalists left in this world. Even Marcus Welby is only seen in reruns. Louie Castoria defends brokers and other professionals, and is a humorist in his spare time. He is a partner in Wilson Elser Moskowitz Edelman & Dicker LLP in the firm’s San Francisco office. The views expressed herein are the author’s, and are not legal advice.

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Louie Castoria

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