RPS: Expect continued softening of management, professional liability lines
This market is experiencing high capacity along with favorable rates, terms and conditions.
A softening of the management liability and professional liability insurance markets that started in 2022 continues this year, according to the 2023 U.S. Management and Professional Liability Market Outlook released recently by Risk Placement Services (RPS).
“The management liability and professional liability market as a whole is still a challenging sector for agents to operate in,” RPS Executive Vice President for Executive Lines Manny Cho said during a recent webcast about the new report. “Even if affordable coverage is not hard to come by and customers are happy with the rates they’re being presented with, there are nuances and differences of coverage that really need to be paid attention to.”
Management liability Insurance covers exposures faced by company directors, officers, managers and business entities and includes directors and officers (D&O) liability insurance, employment practices liability (EPL) insurance, fiduciary liability insurance and crime insurance. Professional liability insurance also is known as errors and omissions insurance or indemnity insurance. It protects businesses should they be sued for negligence.
RPS reports that new entrants and increasing capacity in this particular insurance marketplace is driving up competition and driving down premiums.
“This is probably the most unique market that we’ve been in in quite some time,” Cho said during the RPS webinar. “We have a confluence of a lot of different things coming together that is really causing soft market conditions on almost every single line of business. And then we also have economic conditions that are putting pressure on our lines of business because of the hardening or reduce capacity and increased pricing, other lines of business such as property.”
He added that as 2023 winds down, RPS does not expect many lines of business to harden. “You might be seeing anywhere from 10% to 20% rate reductions in a number of areas,” Cho said in a press release about the report.
With price no longer being the differentiator it used to be, Cho said that agents need to look at other areas to ensure they are delivering the best results for their clients while also protecting their own books of business.
Here are some additional takeaways from the 2023 U.S. Management and Professional Liability Market Outlook from RPS:
- For D&O, the average renewal premium is now coming in at between 20% and 30% of the previous year’s price. “It is truly again a buyer’s market,” RPS Senior Vice President Rodney Choo said in the release.
- In employment practices liability, premiums have stabilized and most renewals without a difficult claims history are now seeing flat rates, according to RPS Area Senior Vice President Dave Tardif.
- Fiduciary lines are no longer an overlooked coverage, according to RPS Area Vice President Jack Rosen. This is due to a changing claims landscape: “A coverage that used to be a throw-in is now facing substantial litigation, and as claims frequency goes up so do rates.”
- The architects and engineers sector is seeing most renewals coming in at a flat rate, but “the majority of carriers are still limiting the amount of capacity that they will put up for any one firm,” says RPS Senior Vice President Ron Kiefer.
“Almost every market we operate in is in a very competitive market situation, with high levels of capacity and good rates and good terms and conditions available,” Cho concluded. This makes it a difficult market for brokers, and it is in times like these that partnerships come into their own.”
See also: