In a market as diverse as professional lines, it’s not surprising to see significant differences in pricing and appetite across different sectors. Understanding those differences is key to brokers’ growing their professional lines business.
“As with any E&S line, there are challenges for brokers, and there are opportunities. At AmWINS, our specialized knowledge of these individual sectors allows us to help retailers successfully navigate the marketplace and grow their business,” says David Lewison, senior vice president and national professional lines practice leader, at AmWINS.
The good news for brokers and buyers is that, in general, the professional lines market remains well-capitalized and competitive. “There is some micro-hardening, but most areas present no significant obstacles to placement,” Lewison says.
Two areas where the professional market continues to be difficult are cannabis and cryptocurrency risks. Regulatory and legal hurdles make those classes particularly challenging.
Another notable exception is professional liability for elderly services and care. As claims have increased in both frequency and severity, several carriers have pulled back from the market. At the same time, others have re-underwritten or sold their book to other insurance companies.
“In healthcare, long-term care, or other aging-related services, we’ve seen rates quadrupling or more. However, facilities are still binding coverage because they need to buy,” says Lewison.
There are also some regional pockets of hardening that buyers will need to contend with. “In Cook County, as well as some parts of Florida and Kentucky, we continue to find healthcare underwriters being very cautious about professional lines because the courts in those regions have been painful to them,” Lewison says.
In most professional lines, brokers and buyers can find a competitive E&S market. Despite claim severity, financial service firms have been an area where AmWINS has experienced strong growth with retailers. A portion of that market growth can be attributed to demographics: as baby boomers approach retirement, they’re looking more closely at what they have saved for retirement and are more sensitive to investment performance.
“The financial services errors and omissions space has always been a really tough area for underwriters because of constantly changing laws and trends in litigation. However, with our knowledge of the marketplace, we rarely have difficulty placing business,” says Lewison.
Lawyers professional is also poised for growth. “With changes occurring both with law firms and in the insurance market, there has been turmoil in that market. Wherever there is turmoil, we look at it as opportunity. We have an exclusive market for firms with 25 or fewer lawyers with a broad appetite that has helped us win new business,” Lewison says.
Private company D&O continues to be handled effectively by the standard market, but with increasing losses, some business has been moving to E&S. Private D&O insurers are seeing losses related to bankruptcy, intellectual property theft allegations arising from new talent recruitment, and increased complexity of claims against the larger private companies.
The market for public companies was expected to firm due to frequent mergers and acquisition claims and bankruptcies, but thus far has not. “Litigation against public companies for mismanagement slows down with a rising stock market, although there is some nervousness as stock valuations keep rising,” Lewison says.
The uptick in merger and acquisition activity has led to increased sales of representations and warranties insurance. And with overall economic growth, architects and engineers (A&E) has also seen a notable spike in purchasing activity.
“Our A&E book has grown rapidly over the last year and a half. That’s important for retailers because if you want to grow your business, you need to focus on sectors that are themselves expanding.”
In cyber, despite the seemingly daily avalanche of data breach activity, insurers aren’t seeing those breaches turn into liability losses beyond their expectations. As a result, buyers will find increasingly competitive rates.
“When the cyber market started 20 years ago, underwriters were charging an uncertainty premium that they have now worked out as they have become better at understanding the exposure. At the same time, the number of markets continues to increase,” Lewison says.
However, the rate of cyber purchasing has notably slowed. “For the past few years, underwriters could count on 30 to 50 percent growth. Now they are telling us that they expect to see around 15 percent,” says Lewison.
This slowdown in growth can be attributed to the fact that most of the larger buyers have already purchased coverage, and the adoption rate of companies under $500 million in revenue has been low. However, this low purchasing rate means there is growth potential for retailers who focus on educating small-company prospects about the need for cyber and who partner with a wholesaler that has access to the right markets and products.
“Small-company cyber is an area where we will be focusing,” Lewison says. “We believe it is a relatively untapped market that presents a good opportunity. A year ago, our AmWINS Access division launched a small cyberliability binding authority with an admitted carrier. The product has most of the coverage advantages seen on larger risks, but at a small business price. At the low premium levels, we didn’t want to be held up negotiating terms for each and every account, so it’s all baked in for a quick quote-to-bind experience.”
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.