This document provides data on insurance claims from 2004-2011 for errors and omissions coverage for insurance agents and brokers in Michigan. It includes charts showing the breakdown of claims by transaction type, process step involved, alleged error or omission, type of policy, line of business, person involved, agency size, and business type split. The largest categories for Michigan were renewal transactions, policy change errors, failure to procure coverage, commercial lines occurrence policies, commercial general liability lines, claims involving producers, agencies with 1-5 million in revenue and a business split of 51-70% commercial and 49-30% personal.

1. a
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Claim Coding for Michigan
Jan ’04 through Dec ‘11
Insurance Agents and Brokers
Errors & Omissions
Jan 2012

2. a
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Transaction Type- Claim Count
Transaction Type- Total Loss Amount
National Michigan
• Renewal 26%
• New Bus- New 22% Mid-term Change, 1 4 %
New Business - Existing Client,
• New Bus- Existing 20% 8%
• Mid Term Change 9 %
Not Available, 7 %
Cancellation, 6 %
New Business - New Client,
22%
Other, 2 6 % Customer Inquiry, 6 %
Coded as Other, 4 %
Non-Renewal, 2 %
Reinstatement, 1 %
Renewal, 3 0 %
Note: Total Claim Count = Count of claims with $0 Loss Incurred Amount + Count of claims with >$0 Loss Incurred 2
Amount

3. a
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Process Step Involved- Claim Count
National Michigan
• Recommend Error 13%
Not Available, 7% Policy Interpretation Error, 7%
• Claims Related Error 10%
• Application Error 10% Policy Cancellation Error, 7%
Claims-Related Error, 8%
• Pol Renewal Error 9% Policy Replacement Error, 5%
• Policy Change Error 9% Policy Issuance Error, 3%
Policy Change Error, 11% Risk Assessment Error, 3%
Binder Error, 2%
Other, 19% Coded as Other, 2%
Certificate of Insurance Error,
Application Error, 12% 2%
Policy Reinstatement Error, 1%
Premium Error, 1%
Quote Error, 1%
Recommendation Error, 14%
Policy Renewal Error, 15%
Note: Total Claim Count = Count of claims with $0 Loss Incurred Amount + Count of claims with >$0 Loss Incurred 3
Amount

4. a
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Alleged Error or Omission - Claim Count
Michigan
National
• Fail to procure coverage 25% Failure to recommend coverage type
• Fail to explain pol provision 8% 6% Failure to duplicate prior coverage
6%
• Fail to recommend cov’g 5% Inaccurate/ incomplete information
Failure to recommend adequate
• Incomplete info to carrier 5% provided to carrier 7%
value/ limit 4%
• Negligent misrepresentation 5% Not Available 8%
Failure to adequately explain policy
provisions 9%
Others,See next slide 32%
Negligent misrepresentation 14%
Failure to procure coverage 15%
Note: Total Claim Count = Count of claims with $0 Loss Incurred Amount + Count of claims with >$0 Loss Incurred 4
Amount
See next slide

5. a
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Alleged Error or Omission - Claim Count
4.0% 3 .7 % Michigan
3.5%
3.0% 2 .8 %
2 .6 % 2 .6 %
2 .4%
2.5% 2 .2 %
2.0% 1 .7 % 1 .7 %
1.5% 1 .3 %
1 .1 %
1.0%
0.5%
0.0%
Other- Miscellaneous
Improper cancellation
Timeliness failure
Failure to adequately
Alleged failure to pay
Timeliness Error
Failure to add Additional
notice of claim to carrier
decrease limit/ value
Failure to provide timely
Failure to increase or
Failure to notify customer
identify exposures
re policy cancellation
Insured/ Loss Payee
Less than 1% claim
Failure to follow cancellation/ deletion instructions 0.86% Alleged fraud or intentional conduct 0.64%
Failure to notify certificateholder of change in policy status 0.86% Beneficiary error 0.64%
Typographical/ clerical error 0.86% Improper identification of Additional Insured/ Loss Payee 0.64%
Exceeding Binding Authority 0.64% Failure to request reinstatement of policy 0.64%
Note: Total Claim Count = Count of claims with $0 Loss Incurred Amount + Count of claims with >$0 Loss Incurred 5
Amount

6. a
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Type of Policy - Claim Count
National Michigan
• Comm Lines – Occ 55%
• Personal Lines – Occ 29%
• Comm Lines – CM 10%
• Personal Lines – CM 1%
Commercial Lines - Not Available, 8 %
Occurrence, 4 2 %
Commercial Lines - Claims
Made, 5 %
Personal Lines - Occurrence,
45%
Note: Total Claim Count = Count of claims with $0 Loss Incurred Amount + Count of claims with >$0 Loss Incurred 6
Amount

7. a
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Line of Business - Claim Count
National Michigan
• Comm GL 21%
• Auto 14% Commercial General Liability,
Not Available, 8%
• HO 12% 9%
• Comm Property 12%
Homeowners, 12%
Dwelling Fire, 5%
Workers Compensation, 5%
Professional Liability, 4%
Other, 23%
Commercial Property, 13% A&H, 4%
BOP/ Special Multi-Peril, 3%
Inland Marine, 2%
Auto, 26%
Note: Total Claim Count = Count of claims with $0 Loss Incurred Amount + Count of claims with >$0 Loss Incurred 7
Amount

8. a
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Person Involved - Claim Count
Michigan
National
• Producer 38%
Owner/ Partner/ Sole
• Agent/Broker Acct Mgr 24%
Proprietor, 9%
• Licensed CSR 21% Agent/ Broker Account
• Owner/Partner/Sole Proprietor 11% Manager, 17% Licensed Customer Service
Representative (CSR), 9%
Not Available, 7%
Non-licensed customer
Service Representative (CSR),
2%
Producer, 55%
Note: Total Claim Count = Count of claims with $0 Loss Incurred Amount + Count of claims with >$0 Loss Incurred 8
Amount

9. a
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GAP(Gross Annual Premium) - Claim Count
Michigan
National
• 1000 to 5M - 39%
25.1M to 50M, 7% 15.1M to 25M, 6%
• 5.1M to 10M -15%
• 25.1M to 50M – 13% 10.1M to 15M, 5%
• Greater than 50M -11%
5.1M to10M, 17% Greater than 50M, 5%
Not Available, 3%
2 to 1000, 3%
1000 to 5M, 53%
Note: Total Claim Count = Count of claims with $0 Loss Incurred Amount + Count of claims with >$0 Loss Incurred 9
Amount

10. a
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Staff size - Claim Count
Michigan
National
• More than 30 - 26% 6 to 7, 14% 21 to 30, 9%
• 11 to 20 - 19%
• 4 to 5 - 12%
• 8 to 10 - 10% 0 to 2, 8%
More than 30, 15%
3, 6%
8 to 10, 15% 4 to 5, 16%
11 to 20, 16%
Note: Total Claim Count = Count of claims with $0 Loss Incurred Amount + Count of claims with >$0 Loss Incurred 10
Amount

11. a
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Business Type Split – Claim Count
Michigan
National
• 71-90% Comm/ 29- 0-10% Comm/ 100-90% Pers,
10% Pers 22% 12%
Not Available, 17%
• 51-70% Comm/ 49-
30% Pers 21% 71-90% Comm/ 29-10% Pers, 9%
• 31-49% Comm/ 69-
51% Pers 14% 91-100% Comm/ 10-0% Pers, 5%
• 91-100% Comm/ 10-
0% Pers 12% 50% Comm/ 50% Pers, 1%
51-70% Comm/ 49-30% Pers,
18%
31-49% Comm/ 69-51% Pers,
19%
11-30% Comm/ 89-70% Pers,
19%
Percentage volume of business in Commercial Line + Percentage volume of business in Personal Line = 100%
Note: Total Claim Count = Count of claims with $0 Loss Incurred Amount + Count of claims with >$0 Loss Incurred 11
Amount