Insurance is not normally the first thing on collection professionals’ minds. However, in the event of an “occurrence,” worried thoughts may circle a professionals mind regarding whether or not correct decisions were made when selecting a policy. Here are seven areas a proactive collection professional should know for their company’s protection.
1 “You’ve seen the myriad of news stories about data breaches across various business sectors,” said Ben Johnson, director of risk management – insurance at Cornerstone Support. “Credit grantors are requiring their partner collection agencies to obtain cyber liability/data breach coverage more than ever before, and the required limits continue to increase as well. But here is some good news: The cost to purchase cyber liability insurance has dropped drastically in the past year, due in part to increased competition from various insurers entering the marketplace. That pendulum will eventually swing back toward higher premiums if some carriers experience data breach claims in our industry, making this the optimal time to get insured. In terms of the coverage, cyber insurance carriers are now offering more comprehensive policy features for various claim scenarios involving hacking, fines, business interruption, cyber crime and more.”
Not only will the industry, and in turn, clients and vendors change, regulation will continue to evolve. This evolution can create new requirements for insurance and licensing needs.
2 “Our licensing and bond areas are preparing their clients for Wyoming’s transition to the National Multistate Licensing System this summer as announced earlier this year, said Janis St. Martin, CIC, vice president of Collectors Insurance Agency. “It is also notable that we have seen a significant increase in requests for new or additional licensing. This is a reliable indicator of industry growth.
3 “We are monitoring developing TCPA litigation to determine what impact ACA International’s recent win over the FCC will have. It is really important that agencies continue to employ sound and defensible TCPA loss prevention procedures. We are working closely with our dedicated and expert attorneys to stay on top of the issue for our insured members.
4 “The insurance marketplace has shifted a bit with additional carriers pulling out of the collection segment. This is always of concern as the number of acceptable carriers that provide adequate errors & omissions is finite. Without sustainable competition, negotiating terms can become increasingly challenging for everyone. Lastly, when considering a non-admitted carrier, agencies should review their client’s contractual insurance requirements as many will include carrier rating and solvency standards.”
Even if you did your homework and your agency was ironclad in its coverage and licensing, changes can bring about gaps in coverage that can be discovered through regular auditing and inspection.
5 “Read your errors & omissions policy carefully – especially the definitions and exclusions sections,” said Johnson. “Endorsements amend the wording in the base policy form, and may contain exclusions or restrictions for consumer protection laws such as the TCPA, or for any class action claims. Does the policy cover defense and settlement costs? Does the carrier place a sublimit on consumer protection laws? Is there an amended deductible for class action claims?
6 “The most common gap to watch for in a cyber liability policy is an exclusion or sublimit for breach notification costs. All 50 states now have data breach notification laws, and the cost could be staggering for companies with high numbers of records stored in their system. Cyber liability carriers sometimes restrict notification costs to lower premiums, but it is important to make sure you are not underinsured for this critical line item on the policy.”
If your research reveals your agency needs to move to another insurance carrier, that is all the more reason to examine paperwork closely. Rarely is a coverage provider a seamless match from the previous.
7 “‘Claims made’ E&O coverage is extremely difficult to move to new carriers without creating gaps in coverage,” said St. Martin. “In-depth coverage comparisons should be offered well in advance of a move to a new carrier. Poorly drafted coverage terms can and do result in a denial of coverage. Regardless, agencies should use their coverage renewal as an opportunity to identify any new services they may be offering or any additional compliance measures that may be needed.”