| 
Justin Kesner
Senior Vice President of Legal Professional Liability Division, Amity Insurance
Age: 34
Industry Experience: 11
As the world grows more complex, financial institutions require more types of insurance, whether it is protecting the attorneys that represent them in real estate transactions or for various cybersecurity issues. Justin Kesner, a senior vice president of the legal professional liability division at Quincy-based Amity Insurance, is here to help. Kesner leads a team of brokers and specialists in the lawyer’s professional liability industry that offer malpractice insurance, among other products.
Kesner helped grow his division more than fourfold since 2010 by changing Amity’s traditional, “retail-only” approach to a new model – adding a wholesale business, which allows other brokers and agents to utilize his team’s expertise and exclusive insurers. The company recently expanded its coverage into New Hampshire by acquiring the book of business from the insurance agency affiliated with the New Hampshire Bar Association.
Q: Part of your job involves providing proof of coverage for firms so that attorneys can perform closings for a bank or a mortgage company. Can you explain this further? Is it mostly on residential mortgages, commercial mortgages, or both?
A: A key part of the coverage we provide is to see that the businesses we represent can transact business before banks and other financial institutions. Most frequently, this is for attorneys who represent financial institutions in areas including but not necessarily limited to real estate closings. We provide this malpractice or “professional liability” cover for practitioners across both the residential and commercial real estate areas.
We advise firms on the scope of coverage that they need. Most banks have a requirement for professional liability that they expect a vendor to carry – it could be $1 million or $2 million – in order to be on the preferred list as loan closers. Our role is to craft a policy that addresses these basic requirements of financial institutions. I will interact with lenders to be certain that these qualifications have been met and provide banks with certifications of insurance or a copy of the policy. Interestingly, Massachusetts is not a state that legally forces attorneys to carry malpractice insurance. Yet, the state’s Board of Bar Overseers clearly identifies if a law firm carries malpractice.
Q: What are the kinds of omissions or mistakes that could happen during a real estate transaction that might require this type of coverage? How common are they and what are the kinds of situations that the insurance protects against?
A: The most common area of malpractice when it comes to real estate closings is what is called a “clouded title.” In simple terms, attorneys must certify that the title to a property is clear of any liens or mortgages. For the highest level of certainty on this, an attorney would go to the Registry of Deeds and research the property. Mistakes and omissions can happen under these circumstances, particularly if a law office is overwhelmed with closings and may rely upon a non-attorney “runner” to do the research.
If a lien is missed, somewhere down the road the seller may discover upon a subsequent attempt to sell the property, that the title was not clear as it was mistakenly represented. Then, what often happens is that a new owner who is responsible for the lien would turn around and sue the attorney who represented the title as clear. A compounding problem is that in Massachusetts, the statute of limitations is three years from the time of discovery, not three years from when the error occurred. These errors are not intentional but that does not make their consequences any less severe.
Q: What kind of role does cybersecurity insurance play in the world of the financial institutions? How common is it for financial institutions to have this insurance and what does it protect against?
A: We are starting to see financial institutions require cyber insurance, which also covers “social engineering.” That is, of course, the theft of funds from a firm which had its emails hacked. We’ve all heard the stories about a hacker masquerading as a legitimate and trusted member of the firm, instructing an employee to divert funds to some frivolous address, which looks like it’s connected to the company but in fact is not. Cyber insurance can help recover those funds. Traditional malpractice insurance would not cover this type of loss, but cyber insurance would. Hackers are getting more and more ingenious and more difficult to detect. In purchasing cyber liability coverage, be certain that there is an endorsement for social insurance and cybercrimes.
Q: What advice might you offer to the CEO of a small bank regarding the types of coverage that their institution should have, knowing that the institution may not have many resources at its disposal and knowing that banks are susceptible to a wide range of mistakes and lawsuits?
A: Make certain that the bank’s professional exposures are being protected. General liability alone will not accomplish this goal. Be certain that liability and cybersecurity policies are in place. Lawsuits filed against lending institutions may be broad in nature and name everyone, even if the institution itself does not bear direct liability.
In addition to having the right coverage, it’s important to conduct ongoing training for personnel within the organization to be certain that they are up to speed on the latest threats, cybersecurity-wise. Many errors and hacks, for example, can be traced to human error. You can’t eliminate it entirely but can minimize it with effective training.
Kesner’s Five Favorite Horse Racetracks:
- Saratoga – Saratoga Springs, New York
- DelMar – San Diego, Califorina
- Belmont Park – Elmont, New York
- Churchill Downs – Louisville, Kentucky
- Keeneland – Lexington, Kentucky
