Recently, Fior Markets put out a study forecasting the status of the global professional liability insurance market, detailing trends in the market and what to expect in years to come. But in order to move forward, market players need to look at the current state of professional liability insurance and where things are currently.
There are many different reasons as to why companies need to purchase professional liability insurance, such as contract requirements and overall reputational protection. It’s important to look at some of the trends and consider how they will affect companies moving forward. Let’s take a look at how things are going in the professional liability insurance market.
A Season of Growth
The professional liability insurance market has seen a major boon in carriers in recent years. New companies are sprouting up and traditional insurance companies that may not have had this kind of service before, or a good amount of resources in it, are now stepping into the picture. The number of carriers in the professional liability market has jumped, causing a major amount of competition in professional liability insurance options as well as setting rates.
Most rates from carriers will only rise a little bit, somewhere between 1%-5% if they don’t stay flat. Carriers also reported that claim frequency looks to continue trending downward while the severity of the claim will continue to go up.
While carriers are seeing more severity in claims, they are also seeing a correlation in increased limits at the request of the clients in question. While $1 million used to be the standard for normal claim limits, companies are now seeing $5 million limits become the norm.
The industries in which professional liability insurance is becoming more and more common and apparent are geotechnical engineering, schools, hospitals, structural engineering, and residentials, such as condos.
E&O, Cyber Risk, and Carrier Responses
Another trend that continues to affect the market is a push to go more tech-friendly in services. The Internet of Things, data and analytics, and artificial intelligence are all assisting carriers in determining risks and rates for clients. Claims are starting to increasingly overlay with traditional cyber coverages as the errors and omissions professional liability market continues to push toward cyber risk.
Carriers should be sure to review limitation of liability and indemnification clauses in their contracts with customers, especially as provisions relate to unanticipated cyber risk exposure. Also, carriers are now limiting or restricting certain classes of business in response to these large claims while reviewing and examining their exposure to risks like cyber and intellectual property.