Navigating market shifts and rising risks
Increasingly severe weather events. Nuclear court verdicts. Supply chain disruption. Inflation. Despite the pressures on the professional liability market, you might be surprised to learn now is a good time to review Errors & Omissions coverage for your clients — and perhaps your own agency’s insurance needs.
“For insurance agents’ E&O, the market has softened to some degree.”
Supply chain disruption and inflation have increased the replacement costs of repairing and rebuilding client properties and assets. Insured values have also increased. All of these factors lead to an increase in the damages clients will incur as a result of errors or omissions by their insurance agents and other third-party professionals. Consequently, those factors also make now the right time to review E&O policy limits to protect both themselves and their clients. Eventually, those claims will be reflected in premium increases. Agents should not wait to capture the current market pricing for their own E&O coverage.
“While personal lines and most commercial lines segments have experienced rate increases, for insurance agents’ E&O, the market has softened to some degree,” says Joshua Wels, president of CITA and CalSurance.
Expanding coverage opportunities amid rate shifts
It’s also important for agents to take a closer look at the factors affecting their clients’ professional liability exposures and to use the current favorable market pricing to broaden coverage. The last several years have ushered in an era of social inflation, with the frequency and severity of large court verdicts worsening. As a result, in E&O and other lines of business, it can be challenging for agents to obtain the higher liability limits that the client actually needs. This is true for agents’ own E&O coverage as well.
Related: How Protector Plans launched their Executive Liability plan and saw immediate success
While the majority of the E&O market has experienced rate decreases, E&O coverage for title professionals is bucking the trend. “The E&O market for title professionals is experiencing rate increases due to lower volumes of mortgage refinancing and the resulting lower premium volumes,” says Bart Newsom, president of Title Pac, which offers E&O, crime, bonds and data breach coverage to title professionals.
“Agents can take advantage of new policy provisions that we have added to our existing E&O portfolio – and with extremely competitive pricing.”
The shifting rates showcase the agent’s opportunity to mine their relationships with other client advisors in other professions who also need E&O insurance. This includes real estate professionals, registered investment advisors (RIAs), broker/dealers, accountants, tax professionals and attorneys. Each of these segments has unique characteristics, and agents need to have the right MGA partner that can deliver the appropriate solution.
“Typically, registered investment advisors tend to be the most risk-averse among the investment professionals,” Wels says. “As a result, they tend to seek higher E&O limits and are a good audience to approach to discuss their professional liability risks. CalSurance has the underwriting expertise and policy options to meet the diverse needs of these professionals.”
Business owners and franchisees are another good target for E&O coverage. Agents, as you write general liability and property coverage for these local businesses, look for the opportunity to round out the account by offering professional liability coverage. Engaging a business to discuss the evolving landscape of professional liability is an opportune way to capture new accounts, as most businesses do not regularly revisit their coverage due to the low frequency of claims. Yet, as agents know, inadequate E&O coverage can devastate a business.
Related: How Protector Plans’ Excess Executive Liability program was launched in just 9 months
Don’t neglect your own E&O coverage
Ironically, agents spend so much time looking out for their customers’ insurance needs that they do not take the time to review their own E&O policy relative to their specific needs and market conditions. Wels encourages agents to leverage the favorable market pricing to closely evaluate their own coverage — both their individual E&O policies, as well as E&O coverage for the entire agency.
“Agents can take advantage of new policy provisions that we have added to our existing E&O portfolio,” he says. “This will allow agents to tailor their policy to reflect their business needs – and with extremely competitive pricing.”