2010 plus international conference the real estate e&o puzzle: how do we evaluate exposures?
TRANSCRIPT
2010 PLUS International Conference
THE REAL ESTATE E&O PUZZLE:HOW DO WE EVALUATE EXPOSURES?
2010 PLUS International Conference
The Round-Up…
MODERATOR:• Fredric W. Trester, Esq., Partner, Manning & Kass, Ellrod,
Ramirez, Trester LLP
PANELISTS:• Inga Goddijn, Managing Director, Markel• Matthew Nangle, President, ProGroup International• Amanda Whitted Sedliak, CIC, Senior Vice President, Capitol
Special Risks, Inc.
• Richard Sheridan, Vice President, ACE USA Claims
2010 PLUS International Conference
What’s On Tap…
• Real Estate Market Trends and Emerging Exposures
• Underwriting Considerations and Available Coverages
• Insurance Coverage
• Risk Management
• Claims Handling
• Take-aways
• Questions & Answers
2010 PLUS International Conference
Real Estate Market Trends and Emerging Exposures
What is different about the real estate market today?
• The Housing Market
• Short Sales & REO Sales
• Loan Modifications
2010 PLUS International Conference
Real Estate Market Trends and Emerging Exposures
What are the specific exposures?
• Real Estate Brokers (Commercial and Residential)
• Property Managers
• Mergers & Acquisitions
2010 PLUS International Conference
Real Estate Market Trends and Emerging Exposures
What are the specific exposures for each category?
• Appraisers
• Mortgage Brokers
• Title Agents
2010 PLUS International Conference
Underwriting Considerationsand Available Coverages
What is the impact on the underwriting process?
In prior years, key questions included:• Length of time in business / licensed?• Are home warranties included?• Are home inspections done prior to closing?• Are standard contracts & seller disclosure statements
used?• Does the agency engage in dual agency transactions?
2010 PLUS International Conference
Coverage Questions on a Real Estate Professional Supplemental App:
What should underwriters look for today?• Percentage of sales involving foreclosed homes• Percentage of sales that are short sales• Percentage of sales from agent owned property• Do any brokers or agents have an ownership
interest in a construction or development company?
• Is any broker or agent actively engaged in “fix & flip” activities?
2010 PLUS International Conference
Coverage Questions on a Real Estate Professional Supplemental App:
What is important to know regarding short sales?• Of the total number of short sale deals, how many
have closed in the past 12 months? • What specific training is provided to staff regarding
short sale transactions?• What specific procedures or policies are in place for
the handling of short sale transactions?• Do you recommend, in writing, that all short sales
be reviewed by an attorney & CPA for potential legal and tax implications?
2010 PLUS International Conference
Underwriting Considerationsand Available Coverages
What is a reasonable expectation of coverage?
• SIRs / Deductibles
• Choice of Counsel
• Retro Dates and Prior Acts Coverage
• Agent-Owned Property
• Pending and Prior Litigation Endorsement
2010 PLUS International Conference
Underwriting Considerationsand Available Coverages
What is a reasonable expectation of coverage?
• BI/PD
• Business Brokerage
• Pollution and Environmental
• Third Party Discrimination
• Syndicators and Promoters
2010 PLUS International Conference
Underwriting Considerationsand Available Coverages
What is a reasonable expectation of coverage, based on the definition of Professional Services?
• Restrictive: Residential Real Estate Sales for others for a fee
• Broad: A comprehensive listing of activities including sales, consultation, title, escrow, leasing, property management, tenant representation, appraisal, auctioneering, business brokerage, relocation assistance, expert witness, notary public, industry related committee participation, management consulting and internet-related activities.
2010 PLUS International Conference
Insurance Coverage
What are the coverage issues arising out of
the changing market?
• The implications of undisclosed services
• Independent (Cumis) Counsel
• Fraud and Deceit
2010 PLUS International Conference
Risk Management
What’s the role of risk management in
this new environment?
• Training
• Coverage Discounts
• Hotlines
2010 PLUS International Conference
Claims Handling
What is the impact on
claims handling practices today?
• Early Resolution
• Mediation
• Managing Counsel
2010 PLUS International Conference
Take-aways
• Better Communications Between Brokers and Underwriters Regarding Coverages
• Brokers and Agents Must Know Which Carriers Offer What Coverages to Avoid Surprises to Their Clients
• The Spirit of the Coverage Remains the Same for Real Estate Malpractice Insurance
2010 PLUS International Conference
Questions&
Answers
2010 PLUS International Conference
Many Thanks to …
• Fredric Trester
• Inga Goddijn
• Matthew Nangle
• Amanda Sedliak
• Richard Sheridan