Insurance executives as well as professional liability lawyers have warned that there are many issues that could aid or worsen the probable professional liability of a CPA such as employing of engagement letters, dabbling and client selection. They have already sent a warning that one of the ever increasing threats is cyber-liability which is targeting practitioners. This is the reason why accountant insurance is being pushed for CPAs in order to protect themselves and their professions from these everyday liabilities.
According to Sarah Ference, CNA’s risk control director and Dave Sukert, Aon Affinity’s senior vice president, the client selection process dictates that they will be struck at least once by celebrity clients. Ference added that there are now increasing number of cases wherein clients and celebrities with high net-worth have been causing liability issues and there are different levels of claims depending on the severity. The reason for this is that they have a lot of money added with their attitude. This is the reason why claims from their clients can be bigger in comparison to regular claims. Their claim, most of the time, includes consequential as well as overinflated damages because they think that the professional did something wrong and that they should suffer as much as them. Not all clients in this category is bad but they are more risky compared to other clients thus they should be handled carefully.
Sukert said that another element that should be taken into consideration is their ego. They are used to getting their way while the CPA feels honoured when they have a client with celebrity status. Insurance companies advised professionals when it comes to these clients it is important to think, slow down and consider the benefits and risks. Consider all the factors as well as the fact that they can fuel litigation.
Another factor that poses a growing risk is dabbling because of the tax regulations that continue to become complex as time passes by. Sukert said that it is not easy for practitioners that are under small firms to be updated with current changes. The landscape is becoming more complex and this is why accountant insurance is necessary because of the demand of the clients that sometimes force practitioners to venture into sectors they are not familiar with.