The number of malpractice claims filed against CPA firms dropped noticeably in 2004 and 2005, which may reduce 2006 premiums, say industry observers. However, risk managers from the profession's two largest malpractice insurers are watchful for an increase in claims."Accounting malpractice insurance is experiencing a rate drop in the small-and-medium-size market," said Dave Sukert, senior vice president of underwriting at Aon Insurance Services, the administrator for the AICPA's Professional Liability Insurance Program.

"This is born of many things, but the main reasons are the results on the client side," he said. "It's the results of risk management and practice management on the part of CPAs."

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