“I would say the market in general is not softening; it's stable, though maybe tightening for those accounts with [claims] issues,” says Stanley Loar, chairman of Assurex Global network agency Woodruff-Sawyer & Co. in San Francisco.

James Grant, divisional director-ExecProSolutions at independent London-based broker R.K. Harrison, tells NU that he has seen some recognized carriers in the U.S. retrench or pull out of certain sectors, “and then two or three jumping in and writing at 20 percent less” over the past 12 to 18 months.

“I wouldn't say [the E&O market] is soft, but it's definitely not firming,” adds Ken Rand, a New York-based managing director and the head of the U.S. E&O practice at Marsh Inc.

E&O liability market experts say most professionals are negotiating rates no more than 5 percent higher to reflect claims and defense-cost inflation. Even then, those slightly higher rates amount to a win for professionals, producers maintain, because longtime E&O carriers have been pushing for 10 percent to 20 percent increases.

The most attractive risk for E&O underwriters are “miscellaneous” professionals, market executives say. This includes as physical therapists, computer programmers, medical transcribers, grant writers and hair stylists.

“We're selling 10 to 20 a day to independent consultants” of various types, says Loar in San Francisco. “We're selling those like hotcakes, and they're cheap,” from about $500 to $1,500 for $1 million in limits.

Rates for even some loss-addled classes are fairly stable because “there are still some competitors out there that are aggressive” since they do not have legacy losses, said Chris DuPuy, a New York-based senior vice president-Special Casualty at Liberty International Underwriters, a unit of Liberty Mutual Group.

Mann at Fireman's Fund agrees, citing as an example the E&O market for real estate agents. Despite recent heavy losses for some of those clients, new capacity is replacing exiting capacity “almost on a constant basis,” he notes, which has resulted in a flat to slightly soft market for those risks.

Still, as Loar notes, many carriers are refining what they want to write in the E&O space. For example, LIU has reduced its appetite for the largest architect and engineering firms even as other insurers compete for the business. Some of LIU's reduced writing in this space reflects the fact that the weak economy has claimed some large A&E risks, says DuPuy.

Who's paying more?

That's not to say that all E&O risks can escape rate hikes. Reina Gregorio, New York-based president of the new Professional Liability Division at Great American Insurance Co., says law firms representing large real estate clients face double-digit rate increases.

Likewise, E&O rates for real estate attorneys these days are 10 percent to 15 percent higher on average, says LIU's DuPuy, but adds that those can range from 5-25 percent and he has seen rate filings seeking increases as high as 35 percent. The market is tightest for real estate attorneys in Florida, California and New Jersey, he notes. Home inspectors and appraisers face 5-15 percent higher rates in several states: Arizona, California, Florida and Michigan.

Title agents are seeing double-digit rate hikes of up to 50 percent when they are able to find coverage, says Gregorio, who adds that new underwriters in that space typically will not cover prior acts.

Meanwhile, insurance agents who place property coverage in regions of the country recently hit by catastrophes—particularly the Northeast, Texas and regions of California beset by wildfires—also are paying more for E&O coverage, says Mann at Fireman's Fund. Superstorm Sandy, which ravaged the Eastern seaboard last October, “is a great example” of the kind of incident that will trigger E&O claims from inadequately insured property owners six to 18 months later, Mann adds.

Other professionals facing higher-than-average rate hikes include:

• Financial institutions, whose E&O rates continue to rise 10-15 percent and even more for those with continuing losses. Plus, retentions are higher and coverage is more restrictive.
• Intellectual-property law firms. Grant noted that two or three insurers each face about $10 million of IP claims filed against law firms that paid only about $300,000 for their E&O coverage.
• Nurse practitioners. If doctor's office visits increase as expected under the nation's health care reforms, doctors likely will turn to nurse practitioners for help in handling their increased caseload, Mann says, which likely will mean more claims against nurse practitioners. “I think underwriters are trying to get ahead of it as they always do,” he adds, “but the real rate will come after the claims.”