It’s not possible to generalize on all classes of professional liability insurance—a collection agency, for example, will face a tougher market than a management consulting firm. But one trend is bound to infiltrate every class of E&O client, from patent attorneys to investment advisors.

Pricing Trends

The miscellaneous professional liability (MPL) space had nowhere to go but up after the “mortgage meltdown” 10 years ago, which affected every line of professional liability business—not just real estate, according to John Torvi, vice president of marketing and sales at Landy.

“As the housing economy market improves and the lending environment improves, the impact on those lines of business and on the overall economy becomes more positive,” Torvi explains. “Small businesses get more active, they hire more, they open up shop, they stay in business—that indicates good things for administrators like us in terms of ability to write coverage, and it means carriers are more willing to write the business as well.”

But MPL improvement might be slowing down. Although many companies “are seeing some increases just because the economy’s better—as revenues go up, the pricing tends to go up a bit,” says Garrett Koehn, president, regional director Northwest for CRC|Crump Group, the market remains “relatively flat in general.”

You can thank the market’s enormous appetite for the plateau. “Even when the market gets hard, it never gets too hard for MPL—there’s just such a tremendous amount of market power out there. I’d contend that virtually any account can be placed,” says Alex Wayne, executive vice president at A.J. Wayne & Associates, Inc., who has identified nearly 50 viable companies vying for MPL business. The result? “The market remains relatively soft.”

So despite recent liability disasters like the Target data breach, MPL hasn’t seen the “big tsunami of litigation that would lead to any significant change, nor does the market seem to be necessarily ready to run downhill again like a couple years back,” says Kirstin Simonson, underwriting director at Travelers Global Technology.

On the Horizon

That’s not to say privacy issues will never impact the market. In fact, moving forward, expect the line between MPL and cyber liability to blur significantly. “That’s going to be the next big thing,” Torvi says. “It has to be, because everybody’s going to need it. We’re seeing some of the carriers now offering coverage that’s affordable to the small business owner—small deductibles, smaller minimum premiums. It’s starting to develop even amongst the small business owners.”

Whether that means issues like intellectual property and media liability or the new risks created by an increasingly shared economy—Simonson cites couch surfing, shared rides and virtual currency—the insurance needs of E&O clients will undoubtedly become more tightly linked to cyber.

“It’s not like the old-school ‘I’m a contractor, so make sure my E&O as a contractor is picked up,’” Simonson says. “Now it’s ‘I’m a contractor and I need that covered, but I also need to make sure I’m covered if there’s a data breach situation where I’m responsible, or if I’m being held liable for a third party’s data breach because of something I did.’ The big coverage development most people are facing is how do we really provide a comprehensive solution for the buyers of E&O?”

Want tips on how to sell more professional liability insurance? Keep an eye on IAmagazine.com and upcoming issues of the Markets Pulse e-newsletter.

Jacquelyn Connelly is IA senior editor.