- Posted by Real Estate Team
- On August 31, 2017
As a real estate brokerage owner or manager, there’s no doubt you want the best E&O coverage available for the best price.
Unlike other types of insurance, E&O insurance underwriters look at a wide variety of factors in determining your premium. Some are more concrete than others. For example, the brokerages Gross Commission Income is a fairly concrete figure. Your internal procedures, practices, and management of your operation, on the other hand, is less concrete. This is why many E&O application ask questions that start with, “What % of your firm’s…” They are trying to get a sense of how you manage your operation to determine what credits they can and can’t apply.
Here are 3 characteristics about your brokerage that could be resulting in higher premiums:
You or your agents don’t hold any Industry Designations.
Not only do Professional Designations help boost your income and your client base, they also help keep your E&O premiums low. Acquiring and maintaining professional designations communicates your commitment to your craft and demonstrates expertise beyond the standard licensing requirements. Some of the more prominent designations to look into are: GRI, CRB, CCIM, CIPS, BPOR, e-PRO® and SFR®
You have more part-time or inactive agents than you do full-time agents.
This one may seem counter intuitive but if you think about it, it makes sense. If you’re brokerage is housing a large number of agents that do just a couple deals a year, the probability that one of them will make a mistake is greater because they’re not as practiced as their full-time counterparts. Because full-time agents work transactions more frequently, they are more familiar with current legislation, regulations and contracts which decreases the likelihood of a mistake.
You and your agents aren’t actively attending association meetings, seminars or webinars.
Actively attending association events (physically or digitally) creates opportunities to engage in educational environments. In addition to your required continuing educations, these opportunities open the door for training on risk reduction, current events, compliance and more allowing the underwriters of your E&O to give you additional practice credits which reduce your premium. To learn more about opportunities in your area, contact your local association of REALTORS for more info.
Although these characteristics are not the only thing the underwriters look at in determining your premium, these can have an impact on how the underwriter views the risk in front of them.
By taking steps to improve your firm’s internal procedures and practices, you not only have the potential to secure better terms on your E&O; you’re reducing your firm’s risk of loss.
For more information about how you can create a more profitable and successful real estate brokerage by effectively managing and reducing the risk of legal liability visit: info.norman-spencer.com/re-guide
The material contained herein has been provided by, and is a marketing advertisement of, Norman-Spencer Agency, Inc., is for informational purposes only, and intended to provide recipients with a guide to available products. The information contained herein is not fully comprehensive, nor does it consider specific objectives, circumstances or needs of individual recipients. This is not intended to replace or substitute for any professional advice. Discounts, promotions, coverages, and benefits referenced herein may not be available in all States, are subject to specific insurance product underwriting guidelines and policy terms and conditions, and maybe discontinued, changed, or amended by Norman-Spencer Agency at any time.