BOP pricing might be sticking to the status quo this year. But moving forward, don’t be surprised if your commercial clients want their BOPs to incorporate more than just standard fare.
According to David Charlton, division president, ACE Commercial Risk Services, property-casualty – micro business, accounts that have traditionally utilized a commercial package form may now be able to secure important insurance through their BOP, including GL property, employment practices, cyber and privacy, E&O, umbrellas and more.
“The biggest change we’ve been excited about is the ability to take the BOP to a number of classes and areas where you might not have typically seen it,” Charlton says. “Instead of making a small business go to multiple carriers and get a separate EPLI policy and a separate cyber policy and a separate contractors pollution policy, it gives you the ability to really do that all under not just one product but also one system.”
Lynn LaGram, assistant vice president of small commercial product at The Hartford, also observes “a lot happening in the optional coverage or the endorsement space,” she says. “For a small business owner and for agents, having one policy and one bill is a really attractive feature as opposed to having to get separate policies for everything. Now, you see carriers trying to create product solutions that create that ease of doing business.”
Here are three important coverages your BOP clients will probably ask you about including in the coming year.
EPLI: Employee practices liability insurance has been around since the 1990s, but now, companies are starting to give third-party coverage more attention, points out Dan Gaynor, vice president of commercial lines at The Main Street America Group. “Up until now, most coverage has been employee to employee,” he explains.
But third-party coverage is becoming increasingly important as many businesses continue to utilize independent contractors. For example, “a contractor goes into an insured’s home and somehow offends the customer—now there could possibly be coverage” with third-party EPLI insurance, Gaynor says. “There are all kinds of possibilities there.”
Drones: This is one emerging trend for which carriers don’t necessarily have a response yet, Gaynor says. “The industry is trying to figure out what to do with drone coverage,” he says. “It’s really hard because first we have to wait for ISO to respond. They filed some endorsements, but states have not gotten to them on the BOP side.”
“Drones are getting a lot of attention in the markets as an emerging risk,” LaGram agrees. “It’s certainly something we’re watching, but we need to see how the FAA regulations shake out before carriers can start developing and offering insurance solutions.”
Cyber: Although standalone cyber insurance is still the norm in the industry, some BOPs are beginning to incorporate coverage for identity and recovery services for both employees and customers, first- and third-party network security breach and more.
In particular, “small business owners need that protection probably even more so because they don’t have the financial wherewithal to compensate for some of these losses,” Gaynor explains. “We just have to make sure they understand they have a need for it.”
“It can be a bit confusing as the term ‘cyber’ can mean different things among carriers,” LaGram adds. “You see carriers responding rapidly to different cyber exposures and responding in different ways.”
For example, LaGram says in the past, you might have had a separate endorsement to cover computer virus. “You’re now starting to see cyber endorsements that contemplate computer virus coverage with data breach coverage,” she points out. “Coverages that have traditionally been separate are being brought together in more of a hybrid solution.”
And offering BOPs that encompass cyber could become an important E&O loss control strategy, as well. “Especially in a lackluster economy, a lot of your insureds tend to buy on price,” Gaynor says. “But at a time when cyber liability is so prevalent, for a minimal premium cost it just makes sense to protect them—because the first thing they’re going to do when they have a loss is forget they turned it down and ask their independent agent why they didn’t have that coverage.”
Jacquelyn Connelly is IA senior editor.