July 13, 2026

Key Developments Impacting E&O Insurance – Quarterly Summary

This quarter, the PLUS Blog covered a lot of E&O ground, highlighting evolving legal, regulatory, and technological risks professionals face.

Settlement Enforceability, Release Scope, and the Need for Clear Documentation

The Importance of Memorializing Settlement Terms emphasized how settlement negotiations can become difficult to enforce when parties agree only on a dollar amount but fail to clearly document all material terms. Using Barbetti v. Afzal as an example, it showed how disputes over release language, confidentiality, tax concerns, and the scope of claims can create costly motion practice – especially when one party is self-represented. The key takeaway is that parties should memorialize settlement terms clearly and contemporaneously, including the intended scope of any release, to avoid later disagreement and protect the finality of the settlement.

Implications for E&O:

Clearly document all material settlement terms – not just the payment amount – to reduce disputes over enforceability.
Address release scope, confidentiality, tax issues, and related provisions during negotiations to avoid later E&O exposure and defense costs.
Use strong claim-handling controls, such as written term sheets or contemporaneous confirmations, to support settlement finality and communication of authority.

Broker Liability, Consumer Fraud Claims, and the Limits of Professional Exemptions

From Personal to Real Property: How New Laws Are Rewriting Risk for Manufactured Housing explained how recent and proposed legislative changes could significantly affect liability and insurance considerations for manufactured homes. It highlighted the New York Land-Home Property Act, which allows qualifying manufactured homes to be treated more like single-family residences rather than personal property, and noted related federal proposals that could further shift how these homes are classified and regulated. These changes matter because they may alter which insurance policies respond to losses, who bears responsibility for accidents or property damage, and whether local codes and state common law standards become more central to risk assessment than traditional federal manufactured housing regulations.

Implications for E&O:

Reclassification of manufactured homes may affect which policies respond to losses, requiring careful advice on coverage placement and gaps.
As local codes and state common law become more relevant, professionals may face greater exposure for failing to recognize changing liability standards.
Brokers, underwriters, and claims professionals should account for ownership, land-lease arrangements, and permanent foundation status when assessing risk and communicating coverage implications.

AI, Human Judgment, and the New Underwriting Standard of Care

Who Decided? Underwriting Human Judgment in the Age of AI examined how artificial intelligence is changing the way professional liability underwriters evaluate risk, particularly as AI becomes embedded in client-facing work, disclosures, and operational decision-making. It emphasized that the central underwriting issue is not simply whether a firm uses AI, but whether the firm can identify, explain, and substantiate the human judgment behind AI-supported decisions. It connected rising AI-related securities litigation and regulatory “AI washing” enforcement activity to a broader professional liability concern: when AI materially influences professional work, the defensibility of reliance, oversight, supervision, and disclosure practices becomes part of the applicable standard of care.

Implications for E&O:

AI use can heighten E&O exposure when professionals cannot explain or substantiate the human judgment behind AI-supported decisions.
Underwriters should evaluate governance, oversight, reliance, and documentation practices—not just whether an insured uses AI.
AI-related disclosures, “AI washing,” and supervisory failures may become key claim drivers as the standard of care evolves.

Broker Liability, Consumer Fraud Claims, and the Limits of Professional Exemptions

Are Insurance Brokers Exempt from the New Jersey Consumer Fraud Act? examined whether licensed insurance brokers may fall outside the reach of New Jersey’s Consumer Fraud Act under the learned professional or semi-professional exemption. Centered on the pending New Jersey Supreme Court case Lowe v. Audet, it explained that the issue could significantly affect E&O exposure because the Consumer Fraud Act allows treble damages and attorneys’ fees and may impose liability based on conduct with only the capacity to mislead. The key themes are the uncertain boundaries of professional exemptions, the interaction between broker regulation and consumer protection statutes, and the broader risk that insurance producers could face expanded statutory liability if traditional exemptions are narrowed.

Implications for E&O:

Potential CFA exposure may expand E&O severity because treble damages and attorneys’ fees can significantly increase claim value.
Uncertainty around learned professional or semi-professional exemptions creates risk for brokers who assume licensing or regulation alone shields them from consumer fraud claims.
Brokers should strengthen documentation, disclosures, and client communications to reduce allegations that placement advice or coverage representations had the capacity to mislead.

Evolving E&O Exposures, Contractual Demands, and Technology-Driven Risk

Emerging E&O Risks: Insights from the PLUS E&O Think Tank highlighted how professional liability risk is becoming more complex as industry-specific exposures, expanding contractual requirements, emerging technologies, and regulatory scrutiny reshape the E&O landscape. It identified heightened risk in sectors such as real estate, construction, healthcare, and life sciences, where specialized services, layered responsibilities, and high financial stakes can increase the potential for claims. It also explained that miscellaneous E&O demand is growing as more businesses are required by contract to carry coverage, while artificial intelligence, automation, privacy obligations, and regulatory claims are creating uncertainty around policy response, exclusions, affirmative coverage, and the boundaries between E&O, cyber, and technology liability.

Implications for E&O:

Sector-specific services in real estate, construction, healthcare, and life sciences may require tighter underwriting around specialized duties, contractual obligations, and claim severity.
Growing contractual requirements for miscellaneous E&O coverage can expand demand but also increase risk if limits, exclusions, or policy fit are not clearly communicated.
AI, automation, privacy, and regulatory exposures may blur the boundaries between E&O, cyber, and technology liability, making coverage intent and policy wording more important.

Expanding AI Liability, Statutory Risk, and Coverage Complexity

AI Risk: Liability Expanding Statutes Webinar Recap summarized a PLUS webinar on the rapidly developing legal and insurance issues created by artificial intelligence. State AI statutes are expanding liability through new duties, statutory damages, private rights of action, and enforcement mechanisms in areas such as deepfakes, healthcare AI, political advertising, discrimination, minors’ protections, and publicity rights. The key insurance theme is that traditional coverage analysis may be strained by AI-related claims because questions of intent, causation, responsibility, and explainability can be harder to assess when automated systems influence decisions.

Implications for E&O:

Expanding state AI statutes may increase E&O severity through statutory damages, private rights of action, and class-action-style exposure.
Coverage analysis may become more complex as AI-related claims raise difficult questions about intent, causation, responsibility, and explainability.
Underwriters, brokers, and claims professionals should track state-by-state definitions, carve-outs, and AI use cases to assess policy fit and emerging exposure.

PLUS University Brings Industry Leaders and Newer Professionals Together in New York and London

PLUS University had some firsts this quarter: It returned to New York for the first time since 2019 and made its debut in London. Each two-day program introduced early-career professionals to core professional liability concepts across underwriting, claims, financial analysis, reinsurance, D&O, EPL, fiduciary liability, healthcare professional liability, and cyber insurance. With expert-led instruction, PLUS University helped attendees build confidence, technical knowledge, and industry connections – demonstrating PLUS’s continued investment in accessible professional development for the next generation of professional liability practitioners.

Learn More

Check out our upcoming events and educational offerings!

Cyber University | September 15 – 17 | Virtual

Ideal for beginners, this instructor-led virtual program provides essential knowledge on coverage dynamics, breach response, emerging risks and market forces in cyber business. Earn CE/CLE credit while also checking off one of the requirements for the CPLP Designation.

D&O University | October 13 – 14 | Virtual

Designed for professionals with five years or less experience in directors and officers (D&O) insurance, as well as those looking to enter the field, this premier instructor-led virtual program builds essential expertise. Earn CE/CLE credit, receive a module waiver for Module 8: Directors and Officers Liability Insurance Introduction (a $75 value) while also checking off one of the requirements for the ExecPLP Designation.

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Whether you’re looking to brush up on a specific topic or building your foundational knowledge, our education catalog has got you covered. With 26 eLearning modules and other on-demand offerings, not only will you gain valuable industry knowledge, but you can stand out amongst your peers with a Certificate in E&O or a designation like the RPLU, CPLP, or ExecPLP.

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