CRC Helps Financial Services Firm Achieve Reversal of Coverage Denial and Agreement to Defend E&O Claim

CRC strives to put the client first by analyzing coverage issues to provide valuable insights that can help facilitate claim resolutions. Recently, CRC Group’s Claims Advocacy Team assisted a privately held financial services company in reversing a coverage denial and obtaining a full defense against a baseless class-action lawsuit related to a Ponzi scheme.


The complaint alleged that the Insured had assisted in defrauding investors by providing false monthly statements
that inaccurately represented payments made as well as the percentage of the fund being invested. The policy at issue provided coverage for certain professional services such as back-office administrative roles, but it excluded coverage for claims arising out of certified professional services such as legal, accounting, and financial planning. The carrier initially denied coverage based on the exclusion, arguing that the class-action complaint alleged accounting errors that qualified as certified professional services.

After engaging with its retail partner and the Insured, CRC learned that the Insured never performed any calculations or certified accounting services for this client. In fact, the monthly statements mentioned in the complaint had been produced using numbers that were calculated and prepared by other companies. As such, the Insured’s role had essentially been limited to data entry—a purely administrative, back-office function that should have triggered coverage under the policy.

In a written letter to the carrier, CRC Group’s Claims Advocacy Team explained the Insured’s true involvement with the monthly statements and reminded the carrier of its broad duty to defend: if any of the allegations in the complaint even potentially triggered coverage, the carrier would have to defend the Insured against the entire action.

The carrier initially stuck by its denial, but CRC responded with professionalism and tenacity, organizing a conference call with the Insured, the carrier, and the carrier’s coverage counsel to help the carrier better understand the Insured’s involvement. This also enabled CRC to advocate directly to the carrier’s coverage counsel instead of working through the claim adjuster. This persistence paid off, as the carrier eventually rescinded its denial and agreed to defend the Insured against the entire claim.

Situations like this highlight just how seriously CRC’s Claims Advocacy Team takes its responsibility to provide trusted guidance to agents and policyholders. Although the carrier was initially firm in its denial, CRC’s articulate, well-argued correspondence and discussions ultimately lead the carrier to do the right thing for the Insured. It is this type of performance in the face of a crisis that inspires agents and clients to reach out, knowing they’ll receive the kind of world-class service CRC is known for across the industry.

To learn more about CRC Group's Claims Advocacy Team, contact your producer.