E&O was one of my biggest issues when I opened my independent agency. I did get a standard rate by going through Independent Insurance Agents of Virginia because of my experience, but the underwriters kind of vaguely let me know they felt like they were taking a chance, watching closely. I was told that most new independent agencies start with a high risk type of E&O that is closer to $2500 and that was about what my quotes were outside of IIAV. Mine cost just under a $1000 a year. Each renewal for four years felt something like an IRS audit and took me a couple of months to prepare for. This was one of the biggest headaches, hassles, and nerve wracking parts of owning my agency. If I do it again, I'm sticking with only a couple of companies since the E&O renewal process wanted detailed information from each company I was doing business with.
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I think if you are captive, some companies help with E&O. Yes my volume did have an impact, but not much. The premium started increasing towards the end of my adventure before I sold my book. The rate was mostly calculated by 'standard' or 'non standard.'
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You can also buy a cheaper coverage with hardly any underwriting for about $500 a year, but it only covers defense costs if you are under an E&O investigation or charge. If you lose the case, you are on your own to pay the damages!
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One more thing, I believe the premium and underwriting had to do with the lines of business you are writing too. I was trying to write everyone that walked in the door or called me, so my venture included some odd paths at times - commercial, health, personal lines, life, etc. That is another aspect I will change if I do it again - streamline my focus and only use surplus lines on very rare occasions.
Dale M. Krause - Pioneer of Medicaid Compliant Annuities - Background