Many insurance markets, such as workers’ compensation, general liability, cyber and crime, are expected to remain stable through the first half of the year. Other markets, such as property, directors and officers, employment practices and fiduciary liability are firming. Following are a few highlights. For the full report, scroll to the end of this post and submit the brief form.
Storm Brewing in Commercial Property Insurance Market
According to the National Centers for Environmental Information, 2016-2018 was historic in terms of the number of billion-dollar weather disasters experienced, including hurricanes, wildfires, severe storms and droughts. The U.S. saw 14 such events last year alone, and all signs point to catastrophic weather increasing over time.
For insurance carriers, the pressure is on to provide coverage while remaining profitable and satisfying the demands of directors and shareholders. In response, some insurance companies are exiting certain types of business altogether, placing limits on other types, scrutinizing deductibles and capping coverage.
Overall, companies with low catastrophe exposures and clean loss histories may see an increase of between 5% and 10%. Companies that haven’t been as fortunate could see increases up to and possibly exceeding 30%.
Defending the Board Is Becoming More Complicated
Public companies likely will see renewals for primary D&O coverage increase between 3% and 7% in 2019. IPO companies will have a more difficult time finding primary coverage, and premiums will be more expensive than those for publicly traded entities.
Last year in Cyan, Inc. v. Beaver County Employees Retirement Fund, the U.S. Supreme Court unanimously held that certain related class action suits asserting claims under the Securities Act of 1933 could proceed simultaneously in both state court and federal court. These multi-jurisdiction class actions will significantly impact IPO litigation and defense costs.
Event-driving litigation (in contrast to traditional wrongful financial acts) is on the increase, and cyber and privacy issues have made their way into D&O litigation from both a regulatory and a class action standpoint. These trends and more point to a market that could change rapidly in the future.
Increased Litigation Pressuring Fiduciary Liability Market
While those in many industries are likely to see premiums increase up to 5% in 2019, higher education, healthcare and financial services companies could see greater increases.
One reason for this is that 2018 was the most active “excessive fee” litigation year since 2008-2009. It is expected to continue. Several upcoming cases allege university plan fiduciaries breached their Employee Retirement Income Security Act duty by offering many complex, poorly performing investment options. Large settlements in these cases could open the door for more cases to be filed.
Another reason is that the future of the Affordable Care Act is uncertain due to various challenges. This may lead to an increase in class action suits due to the confusion among participants and employers.
If you have questions about your commercial insurance, contact your Hylant service team member or your local Hylant risk management expert.
The above information does not constitute advice. Always contact your insurance broker or trusted adviser for insurance-related questions.
YOUR FREE REPORT
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