At the Town Hall Meeting on January 21, CAIFA highlighted that the dramatically increased E&O plan premiums were a reflection of a changed market. Some plans may be less expensive now, but higher prices are sure to come in the near future, they explained.

At the Town Hall Meeting on January 21, CAIFA highlighted that the dramatically increased E&O plan premiums were a reflection of a changed market. Some plans may be less expensive now, but higher prices are sure to come in the near future, they explained.

Many have speculated that the higher premiums for CAIFA's new plan were a result of a bad claims experience.

CAIFA's actual claims information, however, is a tightly guarded secret. Other plans show that good claims experience did not keep the premiums form increasing.

Tony Mahabir, CEO of CanFin Financial, a Mississauga-based MGA, recently renewed his company's E&O plan. He said there were no claims made by the company during its seven years of operation. When he renewed the contract with Encon this year, however, the prices doubled. "It's about $600 for $1 million and $825 for $2 million," exclaimed Mr. Mahabir. "In the past we paid $275 for $1 million. We paid slightly more depending on the riders."

"The firms that are trying to run in a prudent way are not getting a preferred rating. I think this is an issue that all MGA's have, as well as fund dealerships," he added.

Another MGA, Markham-based Albanese Financial Group, had a similar story to tell. The company renewed the E&O plan for the firm and its brokers October 1, 2001 at the usual rate, explained Sam Albanese, President of AFG. But on January 15, 2002, its insurer, also Encon, raised the premiums for all participants entering after that date.

"We used to get $5 million [aggregate per year] for about $340. Now we can only get a maximum of $2 million for about $800," said Mr. Albanese. "I'm sure when we renew, the price will go up again, and our program has had no claims at all!"