You may think you have your professional liabilities covered, but emerging threats have the potential to blow the lid off your limits.
While much of the insurance industry is contending with unprecedented volatility, purchasers of professional lines have enjoyed not just stable but even declining rates.
This varies by line, but on the whole, “capacity between carriers for private D&O placements remains strong,” according to David Garrigus, EVP, management and professional liability practice leader, HUB International. “Underwriters are aggressively cutting premiums, giving automatic renewals and two-year policies to maintain business. D&O insurance for public companies remains highly competitive. There is plenty of capacity, and underwriters remain aggressive. Additionally, E&O rates for consultants, real estate and trustees remain competitive as underwriters compete for their business.”
“It remains a very competitive marketplace. There’s ample capacity for sure,” agreed Stephen Swartley, CUO, executive assurance & SVP, growth & middle market, Arch Insurance. “Towards the end of 2022, more capacity came in and rate came out of the business. We’re still in that part of the cycle now, although it’s starting to be more flat; generally, accounts are still seeing decreases, but less so than earlier in the year, and certainly less so than last year.”
But while rates may still be trending down, insureds need to keep their guard — and their limits — up; triggers for unexpected large losses abound, especially as class actions and nuclear verdicts signal increased volatility ahead.
“I’m speaking specifically to D&O, but it’s across the board,” said Keith Riccio, EVP, commercial public and private liability, Nationwide. “Litigation costs are higher, average settlements have gone up. The numbers that are being kicked around — something that 10 years ago might have been $50 million, now it’s $100 million. Market caps are higher now, so that number has naturally gone up.”
Securities class actions, Swartley noted, “have seen an uptick. That was up 12% last year; it’s up another 5% so far this year … and I think most people expect that uptick to continue through the rest of this year, and some would say to persist into next year.”
Whatever drama lies ahead, it will feature a new starring character: artificial intelligence.
