01/24/2019

State of the Professional Lines and Cyber Market - Q1 2019

Differing conditions exist across the professional liability sector, and questions remain regarding how long cyber can remain a buyers’ market.

 

Professional

In professional liability, the market remains soft overall, particularly in miscellaneous lines. However, there are notable differences across individual classes of business. Some examples include:

  • Debt collection services continue to be a problem in E&O due to frequency of Federal Debt Collection Practices Act (FDCPA) claims.
  • Medical professional liability for doctors working in correctional facilities continues to be very hard to place. The claim severity has not diminished.
  • Insurance Agents E&O had some unexpected price increases in 2018. Minimum premiums have risen to around $5,000. The frequency of storms, wildfires, cyber events and other losses, if uninsured or improperly insured, can cause a rise in E&O claims against the agents that placed or failed to place the insurance.
  • Solo practitioner law firms that do not fit the state bar programs may see price increases.Smaller firms often don’t have the infrastructure of the larger firms, which can lead to more errors and claims.

Other caution signs around D&O and E&O can be seen as we head into 2019. “Underwriters are becoming increasingly concerned with underpricing Public D&O risk combined with loss trends,” says David Lewison, executive vice president and national professional lines practice leader for AmWINS. “Merger and acquisition claims activity is always a concern, and settlement values just keep going up.”

The employment practices liability insurance (EPLI) market still has not firmed as some had predicted, although underwriters are carefully watching claim activity due to #MeToo. Claims activity has picked up, but the market has not yet adjusted.   

“As we moved through 2018, we saw retaliation allegations included in half of all employment practices claims, but the market has not changed as a result,” Lewison says. “If you are buying Employment practices, you definitely want to have prior acts coverage. The allegations that pop up today could be from many years ago, as evidenced in the Weinstein claims. If you’re a growing business, make sure you purchase higher limits to keep up with the risk.”

 

Cyber

High-profile, headline-grabbing breaches haven’t been enough to give the cyber market pause, with underwriting appetite remaining strong. Although this is good news for buyers, the market is becoming more challenging for E&S brokers because interest from admitted markets is simultaneously broadening coverage and depressing pricing, with 30 percent renewal decreases not unheard of.

“My team wrote an additional 100 cyber accounts last year, but our overall cyber premium remained flat,” says Rich Fernandez, executive vice president, AmWINS Brokerage of Georgia in Atlanta. “Everyone is working a lot harder to put almost the same amount of premium on the books.”

The E&S market still has an important role to play in securing excess limits, as well as bespoke cyber coverage for challenging risks. AmWINS also introduced a program designed for small, transactional cyber risks.

“We have the ability to provide admitted paper in that program, which is important for retailers competing for smaller accounts,” says Sam Kravitz, senior vice president, AmWINS Access.

Although cyber coverage continues to broaden overall, there are some signs that insurers are taking a closer look at problem areas such as social engineering and ransomware, with some markets applying sublimits to those coverages.

“We are also seeing carriers looking at their property and liability coverage forms for ‘silent cyber’ — ways they are unintentionally covering cyber and making sure that they are either charging for that exposure or changing their policy language,” Lewison says.

Excess cyber losses are also a growing concern. “Underwriters are paying limit losses on $10 to $20 million excess layers on large programs that were already underpriced to begin with,” Fernandez says.

“Cyber is definitely still a buyers’ market, but like any market, it will eventually change,” says Kravitz. “The only question is who makes the first move to change the market.”


Q4 Renewal Pricing Trends_Professional Lines

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To learn more about how AmWINS can help you place coverage for your clients, reach out to your local AmWINS broker.  If you do not have a contact at AmWINS, please click here.

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.

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