Differing conditions exist across the professional liability market, with indications of hard market pricing appearing in certain segments.
Professional liability is a tale of multiple markets. While miscellaneous professional lines continue to be soft, healthcare and private/non-profit D&O are seeing noticeable market shifts.
“What is happening in the Healthcare and Aging Services market is as close to a hard market as we have seen in years. Markets are pulling out, claims are horrific and premium increases are outrageous. We have seen renewal pricing come in two to five times the expiring premium and still renew,” says David Lewison, senior vice president and national professional lines practice leader for AmWINS Group, Inc.
In non-profit D&O, the market is very soft for traditional charitable foundations. Pricing can be well under $1,000 per million of limit and be bound with limited underwriting information. However, the story is different for healthcare-related risks. The insurers have been continuously hit hard with antitrust-related claims arising from mergers and acquisitions, as well as territorial monopolies. The uncertainty around government-sponsored healthcare continues to add to the complexity in this class.
In Private D&O, many insurers are dealing with the increased cost of bankruptcy-related claims, intellectual property-related claims from hiring key employees away from competitors, shareholder claims hitting the large, “new economy” private companies that look like public D&O claims, regulatory actions and antitrust. Some of the larger insurers are reevaluating their underwriting appetite, which will lead to higher rates and movement of renewals. Nevertheless, there is still plenty of capacity, so it cannot be classified as a hard market.
In 2017, the issue of sexual harassment – especially in the workplace – gained greater awareness as allegations of inappropriate behavior by high-profile individuals were constantly in the news. In many cases, sexual harassment lawsuits seriously impacted businesses and their respective insurers. As social tolerance of sexual harassment decreases, employers must consider the risk to their businesses as a result of harassment committed by an employee. In additional, wrongful termination claims filed by the accused harasser when they disagree with the allegations are likely to increase.
Employment practices liability insurance policies offer benefits beyond defending and covering losses. Many insurers provide risk management services specific to employment practices. These services could become more valuable in this litigious environment.
“EPL placements vary in complexity. Finding the right market will be determined by employee count, industry, geography, need for Wage & Hour coverage and claims history. We are seeing places like California and Florida, where loss experiences are high, continue to be a challenge for many insurers. AmWINS places EPL accounts with more than 75 markets, so we can provide many options for protecting your client,” says Lewison.
With cyber attacks on the rise, interest in cyber insurance continues to grow. In terms of cyber security breaches, 2017 was the worst on record, with over 5,200 breaches exposing 7.8 billion files. The business sector accounts for 39.4% of breaches, followed by medical and government.¹ Estimates of global cyber crime costs are currently in the range of $400 billion per year, with analysts predicting that annual losses could increase to a trillion dollars within the next few years.
Although many stand-alone markets for the coverage exist, because the division between cyber and professional risk is sometimes unclear, placing coverage with a professional lines market on a consolidated form remains the best practice to avoid coverage gaps when an account has both E&O and cyber risk.
“If you write D&O and a cyber event triggers a D&O claim, how will that claim be handled? Will you have a denial of claim by both insurers? Coordination of coverage is key,” says Lewison.
In the coming months, all signs indicate a continuation of soft professional liability market conditions. In this diverse marketplace, it is essential to partner with a wholesaler that devotes the time and resources to understanding the spectrum of the professional lines and cyber arena.
“This is a market where a wholesaler can add value to a retailer through specialization that the retailer can then bring to the client. We can answer questions for retailers on how to cover a particular risk, especially because there are many different forms, terms, and conditions,” says Lewison.
¹ Data Breach Quick Review Report, January 2018, Risk Based Security
Legal Disclaimer. Views expressed here do not constitute legal advice. The information contained herein is for general guidance of matter only and not for the purpose of providing legal advice. Discussion of insurance policy language is descriptive only. Every policy has different policy language. Coverage afforded under any insurance policy issued is subject to individual policy terms and conditions. Please refer to your policy for the actual language.
(c) 2017 AmWINS Group, Inc.
The Thomas Fire, the largest fire in California's history, subsequently led to a mudslide on January 9, 2018, which caused a massive amount of damage in Santa Barbara and Ventura counties. The California Insurance Commissioner has issued a formal notice reminding carriers to pay for damage, citing the "efficient proximate cause doctrine." This article takes a closer look at the doctrine and how it has been challenged in court over the years.
Ordinance or Law insurance coverage provides limited protection for costs associated with repairing, rebuilding, or constructing a structure when physical damage to the structure by a covered cause of loss triggers an ordinance or law. Compliance with ordinances and laws after a loss can add 50% or more to the cost of a claim. This article will help you educate your insureds on exclusions and limitations and help them take a proactive approach to their insurance program.
In 2017, the issue of sexual harassment – especially in the workplace – gained greater awareness as accusations of harassment by high-profile individuals were constantly in the news. In many cases, sexual harassment lawsuits seriously impacted businesses and their respective insurers. Employment Practices Liability Insurance not only provides protection against employee lawsuits, but can also help your clients mitigate their sexual harassment risks.
Due to the Doctrine of Negligent Entrustment, the consequences of allowing an employee with a poor driving record to operate any motor vehicle for work purposes extend beyond a possible traffic violation or accident. These seven tips will help you to proactively manage your drivers and maintain your CDL files as part of your fleet safety program.
The Federal Motor Carrier Safety Administration mandate which requires nearly all U.S. truck operators to use electronic logging devices (ELDs) to track duty status has been upheld in court and will take effect December 16, 2017. The mandate will impact not just the trucking industry, but the trucking insurance sector as well.