During the coronavirus pandemic, it is imperative that independent agents stay engaged with their clients and provide guidance on changes and developments in the professional liability market. COVID-19 sprung many changes on businesses, some good, some bad—but either way, keeping clients up to date on market conditions, risk trends and risk management options is more important than ever.
“As the insurance market exhibits a sustained hardening, it is clear insurance carriers continue to push for rate increases, restrictions in capacity, and changes in terms and conditions on the policies they underwrite," says Sean Gormley, president, The Glatfelter Agency. “These changes give rise to an ever-increasing need to be diligent when evaluating renewal policy terms and conditions to ensure that first any potential gaps in needed coverage are identified; and, second—perhaps more importantly—that you are able to gain an understanding of the rationale behind the changes and better inform your client conversations."
COVID-19 has forced many businesses to operate remotely, thus creating additional risks for companies as they seek to balance their company's security with that of allowing employees ease of access from home. Cybercriminals are quick to target the weaknesses created by this digital migration, but this speed is not always mirrored in the insurance environment.
“The cyber exposure continues to grow, and professional firms are seen as soft targets of opportunity," says Steven Barbal, managing director professional liability, The Hartford.
To make matters worse “not all professional liability products are designed to contemplate professional services being offered virtually," says David Egosi, head of professional risks, Hiscox. “Agents can support their clients by confirming or amending coverage intent."
“During the past 12 months, most carriers have been shoring up their cyber exposure, including silent cyber," Egosi says. “The result will be a stronger bifurcation of coverage under professional liability products. Agents should not rely on standard errors & omissions policies and should always offer their customers a secondary or packaged cyber policy that affirmatively covers both first- and third-party exposures."
In the past, cyber coverage has been considered an optional coverage “but in the current climate, it is much more front and center," says Bill Balderston, managing director, head of sales & distribution, Victor Insurance Managers Inc. “Cyber is a good reminder for brokers to think beyond the professional liability policy and evaluate other coverage that their clients may need."
Working closely with clients, agents will be able to ensure they have the appropriate coverage in place that will respond to the evolving exposures they face.
Moreover, preparation for both the annual renewal process and new business opportunities cannot begin early enough. Getting sufficiently prepared with the necessary documentation is essential.
“Make sure that you are prepping renewals in advance and giving enough time for the carriers or wholesale partner to really go to the market with enough time," says Manny Cho, executive vice president, RPS Executive Lines. “It's no longer the case of, 'I'm sending it to you two days before the renewal and I need a quote'—those things just don't happen anymore."
As the market continues to evolve, particularly due to the impact of COVID-19, agents are in a great position to help clients review their policies and avoid coverage gaps.
While cyber coverage has been brought to the forefront, a decade of soft market conditions “has left some blurred lines between professional liability and general liability products, particularly in areas like construction professional," Egosi says.
“And as general liability and excess casualty market hardening continues to outpace professional liability, some have looked to professional liability markets to address coverage gaps in recent years," he adds. “This offers both opportunity and risk, but above all else, agents should invest time to understand their client's exposures to ensure the combination of both products addresses their needs." Olivia Overman is IA content editor.