As markets continue to tighten partially due to the COVID-19 pandemic, a theme is developing quickly: risk controls are being evaluated within every coverage. The art of underwriting, with its detailed assessment on how insureds are controlling their risk, is making a comeback as carriers more carefully consider where they deploy their capital.
For a summary of the latest commercial insurance market news, pricing and coverage trends, industry issues and overall outlook, read Hylant’s newly released Market Update report. Scroll to the bottom of this post to request your complimentary copy. Here are a few highlights.
Directors, Officers and COVID-19 Litigation
Public company D&O market conditions continued to firm rapidly in the first quarter of 2020, with primary rates increasing between 20% and 50% or more. We expect this firming to continue as insurers underwrite risks in the midst of the COVID-19 pandemic.
More details regarding cash management/solvency, crisis management and communications with shareholders are now being required of all insureds. Two COVID-19 cases have been filed relating to misrepresentations as of this writing, and we expect to see more COVID-related litigation in the coming months.
Employment Practices, Workers’ Comp and a Changed Workforce
COVID-19 is presenting complex dilemmas for businesses. Decisions regarding layoffs, remote working, workplace safety, employee benefits and other evolving issues create exposure to discrimination, retaliation, invasion of privacy and other employment-related wrongful acts. Therefore, carriers are requiring more detailed underwriting information on the impact of the pandemic and controls in place.
The COVID-19 pandemic may cause an increase in disease-related workers’ compensation claims. In addition, plant closings and large-scale layoffs, such as those happening now due to the coronavirus, generally increase workers’ compensation claim filings. This situation could accelerate firming of the workers’ compensation insurance premiums, which generally has been remaining stable between -2% and +2%.
Cyber Liability and Working from Home
Last year saw a 1% increase in cyber breaches and a 184% increase in exposed records over the previous year. The Q4 rate increases were between 5% and 15%. With a significant volume of employees working from home during the beginning stages of COVID-19 and event-based hacking, claims activity will need to be monitored.
We expect to see more underwriting scrutiny through the remainder of the year. We recommend that companies bolster incident response plans, implement security training and fully detail their patching frequency. For organizations with claim activity, the underwriting community is most interested in the “lessons learned,” along with the changes in protocols and incident response preparedness.
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
Helping you stay informed of trends in the market is just one of the ways we show our commitment to you and your business. To download your complimentary copy of Market Update: Commercial Insurance State of the Industry, May 2020, and to receive similar information in the future, complete and submit this form.