What if CPAs Designed an Insurance Program for Themselves?

By G. William Hatfield

Imagine for a moment that you are faced with the cancellation of your professional liability insurance policy. When you shop the market to find a replacement policy, you find that all of the carriers have either abandoned the market or have increased their premiums to the point where you are no longer able to afford the coverage.

That was the situation during the last “hard” insurance market, during the 1980s. The major insurance companies—after years of underpricing their policies in order to gain market share—suddenly left the market altogether or imposed huge premium increases in order to cover their losses. Many CPAs were faced with the prospect of “going bare” and exposing their practices to unacceptable liabilities in an increasingly litigious business environment.

A group of those CPAs chose to see the crisis as an opportunity and formed an insurance company that would protect CPAs from liability and insurance problems. The company would collect enough premiums to pay claims and operating costs, and it would return to policyholders any surplus not needed to pay future costs. It would be owned by its CPA policyholders, and its directors would be CPAs elected by the policyholders.

As a member-at-large of Camico’s board of directors, representing the New York State Society of CPAs’ exclusive endorsement of the program, I have had the opportunity to hear firsthand how CPAs go about building an insurance company to serve the CPA profession in the long run.

When the NYSSCPA selected Camico as the Society’s only endorsed provider of professional liability insurance, we weren’t just impressed with the proactive loss prevention programs and the personalized approach to underwriting. We also were impressed with the company’s commitment to its original mission to always be there for CPAs. Recently, we have seen such insurers as Westport, Safeco and TIG exiting the accountants’ professional liability market as large catastrophic losses, decreasing investment income and inadequate rates begin to take their toll on profitability.

Servicing the CPA profession for the long haul means providing loss prevention and practice management expertise that only an “inside” knowledge of the profession can provide. Camico’s advisory hotline includes direct access to specialists—many are CPAs and/or attorneys—who provide such specialized services as:

• legal advice on how to handle subpoenas, summons and regulatory or third-party requests for information;
• federal tax advice on corporate, estate and gift taxes;
• engagement and disengagement letter advice and review;
• a loss prevention resource library available to all policyholders, and many more services.

In the event of an incident or claim, the risk management and claims philosophy of the company is proactive, not reactive. The early reporting of potential claims is encouraged in part by offering deductible credits of 50 percent, up to $50,000, so that Camico can help mitigate any further damage.

Finally, the top-quality service for which Camico is so well known has to be experienced in order to be appreciated. And the best way do that is to become a member-owner of Camico.