Hanover Study Confirms Importance of Errors and Omissions Insurance for Professional Service Providers
A recent study by The Hanover Insurance Group (NYSE: THG) revealed that nearly half of professional service providers faced non-performance allegations from customers in the past two years. The study underscored the critical need for professional liability insurance, with one in five providers lacking such coverage, thus risking financial loss. Major findings include that 90% of businesses seek guidance when purchasing insurance, and 65% without errors and omissions insurance cite a lack of awareness as the reason for not buying it.
- The study highlights a strong interest in professional liability insurance among service providers.
- 90% of businesses actively seek advice, indicating a market opportunity for insurance advisors.
- The finding that only 20% prioritize price over proper protection shows a shift towards valuing adequate coverage.
- One in five professional service providers lack professional liability insurance, exposing them to financial risks.
- Nearly half reported customer payment disputes, often related to lack of insurance coverage.
WORCESTER, Mass., Nov. 10, 2020 /PRNewswire/ -- A recent study from The Hanover Insurance Group, Inc. (NYSE: THG) found nearly half of professional service providers faced allegations of non-performance by customers in the last two years, underscoring the need for professional liability insurance, also known as errors and omissions insurance.
The study, conducted in conjunction with Zogby Analytics, surveyed decision-makers at professional service firms, inquiring about risks and exposures, insurance buying processes and errors and omissions insurance coverage.
While these providers face significant professional liability exposure as a result of the services they perform, the study found one in five do not have professional liability insurance, placing their businesses at risk of financial loss. In the last two years, nearly half of businesses indicated customers had withheld payments due to contract disputes, which is often covered under professional liability policies.
"In a year full of change and disruption, many professional service providers have had to adjust their business models to meet current needs," said Gregory W. Leffard, president, professional and executive lines at The Hanover. "With these changes, businesses likely face new exposures, stressing the importance of consulting insurance experts to ensure they are protected. The good news is nearly
Other key findings of the report include:
- Proper protection outweighs price: When contemplating insurance, professional service providers are focused on securing the right coverage. Only
20% of service providers feel price is their top priority - Informed consumers expect options: Buyers are conducting their own research into carriers prior to requesting quotes from independent agents. Eight in 10 are leveraging their research to ask for quotes from specific insurance carriers
- Customer loyalty is tested: For independent agents, customer loyalty is tested at each renewal. About half of service providers report changing insurance agents in the past three years due to large premium increases
- Agent opportunity to motivate non-buyers:
65% of service providers without errors and omissions insurance report not purchasing it due to a lack of awareness, consideration, or follow-through. Nearly a quarter cite they had intentions to purchase it, but had not yet
This report was published as part of the Hanover Specialty Research Series, a series intended to deliver valuable insights into evolving risks, emerging exposures and industry trends. For more information on The Hanover's Professional Liability Risk Report, please visit: http://www.hanover.com/professional-liability-risk-report or to learn more about The Hanover's professional liability offerings, please visit Agent Solutions on The Hanover's website.
About The Hanover
The Hanover Insurance Group, Inc. is the holding company for several property and casualty insurance companies, which together constitute one of the largest insurance businesses in the United States. The company provides exceptional insurance solutions through a select group of independent agents and brokers. Together with its agent partners, The Hanover offers standard and specialized insurance protection for small and mid-sized businesses, as well as for homes, automobiles, and other personal items. For more information, please visit hanover.com.
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All products are underwritten by The Hanover Insurance Company or one of its insurance company subsidiaries or affiliates ("The Hanover"). Coverage may not be available in all jurisdictions and is subject to the company underwriting guidelines and the issued policy. This material is provided for informational purposes only and does not provide any coverage. For more information about The Hanover visit our website at www.hanover.com.
©2020 The Hanover Insurance Group, Inc. All Rights Reserved.
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SOURCE The Hanover Insurance Group, Inc.
FAQ
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