two years, the directors and officers liability (D&O) marketplace remains competitive for most firms, the publication noted.
“Good risks – and, sometimes, those not so good – are seeing flat renewals or moderate decreases of 5% to 10%,” said Montgomery.
For instance, a broker noted the example of a publicly traded company with “horrible financials” that was renewed at the same price as the expiring policy.
“Just because the market has a lot of capacity doesn’t mean insurers will make it available,” said Montgomery. “An insurer might be willing to use only a portion of its advertised capacity on particular risks.”
Financial institutions face tougher market conditions than most firms in the current D&O marketplace. Last year at this time, the focus was on big banks. Now, the economic turmoil has engulfed many community banks, as foreclosures and bad loans take their toll on the banks’ balance sheets.
Both rates and deductibles have gone up for these banks. Where a bank might have had a $10,000 deductible a few years ago, the same bank has to carry a $50,000 to $100,000
Commonwealth of Massachusetts
Division of Insurance
March 5, 2010
VIRGINIA SURETY COMPANY, INC.
175 West Jackson Blvd.
Chicago, IL 60604
The above company has made application to the Division of Insurance to amend their Foreign Company License to transact Legal Services insurance in the Commonwealth.
Any person having any information regarding the company which relates to its suitability for the license or authority the applicant has requested is asked to notify the Division by personal letter to the Commissioner of Insurance, One South Station, Boston, MA 02110, Attn: Financial Surveillance and Company Licensing within 14 days of the date of this notice.
deductible today. Banks with an expiring three-year policy often must pay a comparable premium for a one-year renewal.
Terms and conditions have become more stringent as well, particularly an exclusion applicable to regulatory actions. In some cases, insurers are unwilling to provide prior acts coverage. These are restrictive provisions for banks. Firms with significant real estate operations also face a tough market for D&O insurance. Law firms that do a lot of real estate work, property managers, and developers are among those having D&O liability insurance problems.
Employment practices liability (EPL) claims have increased over the past two years, putting pressure on insurers to increase rates for employment practices liability insurance (EPLI).
Employee charges of unlawful discrimination filed with the Equal Employment Opportunity Commission provide an indication of EPL claims activity. Perhaps reflecting the general economic conditions, the number of charges filed with the EEOC rose from 82,792 filings in 2007 to 95,402 filings in 2008, a 15.2% increase. The number of filings eased off a bit in 2009 to 93,277, but remained very high in comparison to prior years. Interestingly, charges of retaliation increased significantly more than the other categories.
Indeed, rates for EPLI have edged up for some firms, typically, up to 5%. Still, most firms can expect flat renewals or modest decreases of 5% or so.
Rates for fiduciary liability and most classes of professional and errors and omissions (E&O) liability insurance remain competitive, with “as is” renewals common or moderate decreases in some cases.
Make sure your fiduciary liability in-
surance affords the broadest coverage
available for liability arising from the
Health Insurance Portability and Ac-
countability Act (HIPAA). Many
firms are not aware that important
new requirements go into effect this
month.
Coverage for the mishandling of personal information is becoming increasingly important. The nature of the allegations and the relationship to the claimant determine where the insureds need to look for coverage: EPL, fiduciary, D&O, E&O, or cy-ber liability policy.
The property insurance marketplace remains competitive going into 2010. Accounts without significant catastrophe exposures can expect 5% to 10% decreases. Some firms are seeing 20% to 30% decreases, particularly if they take their account to market. Blanket coverage is readily available. The market shows no sign of hardening and will likely stay competitive for several more months.
Insurers are trying to hold the line on accounts with significant catastrophe exposures, but even those risks can often expect flat renewals and even some reductions. Some insurers, particularly HPR insurers, have been more successful than others in holding the line on pricing for accounts with catastrophe exposures or other underwriting issues.
One broker noted that the London market has shown more patience in holding out for the rates they feel they need to write a particular risk.
The same story pretty much applies for general liability and umbrella coverage. Most firms can expect modest rate reductions in the 5% to 10% range. For some accounts, letters of credit may be an issue. Insurers have become more cautious in connection with what they will accept as collateral. Asking for a shaved-limits endorsement in connection with excess liability coverage is an option.
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