"Accountants tend to extend their practices into areas in which they have less competence," noted Dan Reed, second vice president for professional liability at Travelers. "As smaller firms engage in new services, their risk exposures change. Some smaller firms are extending their services to do financial planning or offer investment advice, or sell insurance products. That exposure can be covered separately or as an endorsement." Meanwhile, cyber-security is becoming critical, according to Tom Henell, chief marketing officer of North American Professional Liability Insurance Agency, an independent broker. "Information security and data privacy are the growing issues affecting the market," he said. "Nearly every state has data security laws. The distinction is whether a breach is part of 'performing professional services.' For example, if a CPA did 800 tax returns, and someone breaks in and accesses the data, or he leaves his laptop on the train, there's a question as to whether his mistake is covered under the definition of performing professional services. But he would have to notify all 800 clients that there was a breach."
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