Carriers writing Professional Liability insurance are hiking premiums, reducing capacity and closely scrutinizing accounts in virtually every line of coverage, according to the 2021 Management and Professional Liability Market Outlook.
Professionals operating in certain industry sectors—like Allied Healthcare, Architects & Engineers involved in structural or residential projects or lawyers dabbling outside of their areas of expertise--are among those most impacted by this market hardening.
Even Insurance Agents and Brokers themselves are feeling the pinch of higher premiums for their Errors & Omissions coverage as insureds blame them for insurers denying property damage claims following natural disasters.
“What we are seeing is a level of collective underwriting discipline that we haven’t seen in a while, which is the essence of a firm market,” observed Rodney Choo, Senior VP, Executive Lines, at RPS.
Despite all the doom and gloom, Choo said he sees “a light at the end of the tunnel…barring another collapse with COVID and the economy.”
There is some new capacity entering the Management and Professional Liability market, and many professional liability insurance buyers are finding suitable solutions for their coverage needs in the Excess & Surplus Lines market.
Allied Healthcare has been undergoing a long overdue market correction, with rate increases for primary coverage averaging 15% and excess coverage premiums increasing from 50% of primary premium to 75% or 80%, according to Tyie Moore, Area Senior Vice President of the Executive Lines division at RPS. She said rates had been relatively flat for the last five years, so this line was due for a correction. Small residential care facilities have been most impacted by the market firming.
Meanwhile, the market for Architects & Engineers Professional Liability coverage is basically split in two: one for highly desirable, low-to-moderate hazard accounts, the other for companies that are involved in activities that underwriters are concerned about, such as structural engineering and residential construction.
“Construction defect claims have been a major factor for firms involved in condominium projects,” explained Robert Kenney, Area Senior Vice President at RPS. “If there is litigation, or other demands, the design team is usually included, so there’s a high frequency of such claims.”
While pricing is relatively flat in the admitted market for Lawyers Professional Liability coverage, carriers are cutting back on capacity—especially for firms with fewer than 10 attorneys—which is driving many of these accounts into the E&S market. But law firms entertaining quotes from non-admitted insurers will find premiums substantially higher--perhaps 20% or more—than in the standard market.
In addition to reducing capacity, underwriters are placing greater scrutiny on firms in tougher practice areas—such as securities law, intellectual property law and medical malpractice--or on those that have members “dabbling” outside of their areas of expertise, said Ron Kiefer, Area Senior Vice President at RPS carriers are also concerned about attorneys handling wills, trusts and estates due the surge in deaths related to COVID-19.
RPS stands ready to help retailers navigate today’s turbulent Management and Professional Liability Market by serving as their outsourced placement team. As a wholesaler, RPS has longstanding relationships with underwriters in the E&S market, as well as the expertise needed to educate agents’ and brokers’ internal teams, as well as their insureds.