The current economic downturn and the uncertainty of the timing of a rebound will more than likely trigger an increase in the number of professional liability claims.
"We've seen an increase in frequency of potential claims and requests for subpoena assistance," revealed Jeff Day, assistant vice president of underwriting for CNA, the underwriter for the American Institute of CPAs' Professional Liability Insurance Program. "We do expect some carriers to make changes to their programs and possibly even leave the marketplace."
Clients are less tolerant of losing money and employees are more likely to steal money when times are tough, noted Michelle Duffett, chief executive at Geneva, Ill.-based Insight Insurance Services. "Our biggest concern is with defalcations," she said. "Invariably, a lawsuit says the accountant should have caught something before it happened, regardless of the level of service the accountant was engaged to perform. We've had lawsuits against accountants where all they did was prepare tax returns."
Read the full story, authored by Roger Russell, here on the WebCPA website.