·     The Commonwealth of Kentucky has awarded the group errors and omissions insurance policy for real estate licensees to the Williams Underwriting Group (“Williams”) beginning on April 1, 2008.  The new insurance carrier will be National Union Fire Insurance Company of Pittsburgh Pa. (“National Union”) a member company of American International Group, Inc. (“AIG”). 

·     The Kentucky Office of Insurance noted that the policy offered by National Union “provide[s] the Commonwealth a better value” with a recognized lower premium than the incumbent and recommend that the group policy bid be awarded to Williams. 

·     Unfortunately, you may have heard about a potential gap in coverage caused from changing from the incumbent’s policy to the National Union policy.  Our policy does not create any additional gap that does not already exist under the current group policy. 

·     Based on the incumbent’s policy wording, any perceived gap or lapse in coverage is actually caused by the incumbent carrier.  The incumbent carrier’s policy states that they will:

“…pay on behalf of the Insured Damages…provided that…prior to the inception date of the Individual Policy Period no Insured had a basis to believe that any such negligent act, error or omission, or Related Negligent Act, Error or Omission might reasonably be expected to be the basis of a Claim against the Insured.” 

Therefore, at every policy’s renewal, any “Related Negligent Act, Error or Omission” that “might reasonably be expected to be the basis of a Claim against the Insured” that a licensee knew about prior to each year’s renewal could be a basis of denial by the incumbent, regardless if the claim ever develops into a written demand in a future policy period.  Thus, the gap exists under the incumbent’s language because licensees cannot report claims that are not in writing in the current policy period and run the risk of having them denied in future policy periods as they knew about them prior to when the written claim was tendered!  This problem perpetuates itself each year as the incumbent policy renews. 

The incumbent’s 2008-2009 enrollment form states that if a licensee has “any knowledge of any act, error, omission, fact or situation that might give rise to a claim against [them], it must be reported in writing immediately to [the licensee’s] insurance carrier before [the] current policy period expires.”   Furthermore, the incumbent’s 2008-2009 program overview states that covered claims are those “[c]laims which were unknown an unforeseen at the inception of the policy period.”  As you can see, the incumbent carrier’s claim warnings place licensees in a precarious position of clearly warning them about prior knowledge of claims without providing them a mechanism to report them. 

·     The National Union policy is much broader as it allows licensees to report non-written claims and incidents.  These incidents are circumstances that a licensee could reasonably expect to give rise to a claim. Both the National Union policy and the incumbent’s policy use the word reasonable when describing prior knowledge.  This is important because our standard and intent is the same as the incumbent carrier. 

Incidents, once reported, that develop into claims will be considered tendered to National Union at the time the incident was reported.  Licensees will not be caught in the precarious trap they are in today should an incident develop into a written demand or lawsuit in a future policy period.  Furthermore, once reported, the insured can involve National Union’s expertise in mitigating the potential loss of a claim and resolving them earlier, allowing licensees to focus on running their business. 

·     AIG Domestic Claims (“AIG Claims”) evaluates every claim on its own merits and seeks to work with policyholders throughout the claims process.  They will strive to provide the best possible claims service, which includes treating policyholders fairly and reasonably. 

If after reviewing the above information, please do not hesitate to contact us.  We welcome your questions and will gladly answer them. 

Respectfully, 

The Williams Underwriting Group, Inc 

Phone: 800-222-4035

Louisville Area: 284-2321