Insurance

News & Commentary on Specialty Insurance, Risk Management & Private Equity – with an emphasis on professional liability and entrepreneurship

Total news: 61
Last news: April 28, 2009 06:00:00

There has been much talk about the coming (imminent) hard market, led by public financial institution directors & officers (D&O) liability insurance (see prior post). It is nowhere in sight. Except for a few select segments, competition continues, rates are flat or down, and insurer marketing reps continue to press for more business. Willis recently published a report confirming this, and suggesting that a hard market was not just around the corner. The report, Marketplace Realities & Risk Management Solutions:... -�[Read�more]

There has been considerable discussion about a market turn (hardening) in the D&O (directors & officers) liability insurance market, but this is only happening in segments and for organizations that are exposed to significant losses from the economic crisis. Financial institutions are obvious examples of organizations that will attract underwriters scrutiny and likely see significant increases and tighter terms. We are seeing rates increases for financial institution D&O, both public and private, and some increases in public company D&O. However,... -�[Read�more]

While maybe not the most exciting topic, document retention is actually an important issue for insurance agents and brokers and can impact insurance agents’ and brokers’ professional liability insurance (E&O). Clients may rely on the agent or broker (producer) to have copies of critical documents (read policies), and may hold their producer responsible for providing a copy in time of need. Recent articles in Business Insurance notes the importance of document retention (see here and here). Best practices would be... -�[Read�more]

Insurers spread risk, primarily through reinsurance, in order to take on greater risk through their insurance polices than they could retain on their own. Syndication and subscription policies are other means to share risk which reduces an insurers exposure to any one loss. Lloyds of London has used subscription policies for years as a means of spreading risk. The concept of syndication, or using a number of insurers to write a risk, also makes sense for insureds in our current... -�[Read�more]

A recent federal court decision demonstrates the potential complexity of technology professional liability (E&O) insurance coverage and claims. In this case, the court determined that no coverage was provided under the insureds GL policy nor under the insureds technology E&O policy. The case, titled Eyeblaster, Inc. v. Federal Ins. Co. (Chubb) (see here), involved an internet advertising firm (Eyeblaster) that allegedly intentionally downloaded spyware to a third partys computer (Seftons) causing damages. Excellent summaries of this case can be found... -�[Read�more]

Program business can be a great way to differentiate your insurance business, but getting into a position to be a program administrator is not easy. Insurance carriers writing program business expect a significant level of expertise, underwriting discipline and processing capabilities in addition to a book of business. Many insurers have suffered by not doing a good job of managing their programs. As noted by this National Underwriter article (see here), insurers will carry out thorough due diligence on a... -�[Read�more]

Employment law has developed into a gold mine for a few lucky people and their attorneys, resulting in increasing claims against employers and making employment practices liability insurance a mandatory coverage. One of the claims employers face is retaliation, and employers may be surprised to find that retaliation may be prohibited in certain cases. An article by law firm Troutman Sanders is an excellent review of retaliation exposure that employers may face (see here). The article talks about a crusading... -�[Read�more]

The massive decline in the value of real estate, stocks and other investments will likely trigger investor suits against investment professionals, and will likely result in an uptick in professional liability insurance claims. In anticipation, we are seeing more disciplined risk selection, more restrictive terms and higher pricing from specialty lines underwriters for some professional liability classes such as investment advisors, private equity and hedge funds, trustees, accountants and consultants. A recent article, entitled Investment Performance and Liability Claims, by... -�[Read�more]

The economic crisis is changing how medium sized commercial insureds view the purchase of insurance, and this change is having an impact on their broker relationships. Not surprisingly, value, a euphemism for price, is becoming more important and broker relationships less important, or so says a recent study. Greenwich Associates has released the 2008 Middle Market Insurance Research Study. The press release for this survey is hard to find on their web site - try here or here - but... -�[Read�more]

What product and services do insurance agents and brokers, whether retail or wholesale, provide to their clients? Many practitioners define this narrowly – the product is insurance, the service is advice, and sell accordingly. However, some organizations have taken a wider perspective, and try to add additional value. The classic example in the specialty lines business, for an insurer, has been Hartford Steam Boiler Insurance Company, a company which provides both insurance and the expertise to significantly reduce catastrophic losses.... -�[Read�more]

Customer surveys are very popular in the insurance business, particularly online surveys. Our friend, Guy Kawasaki (see blog home here), has a very helpful post on The Art of Customer Surveys. Guy is the author of one of our favorite posts, The Art of Schmoozing. One of his key points is especially important in the insurance business – customers do not want to complete surveys. We selectively survey our customers using a few guidelines: Provide an opportunity to respond in... -�[Read�more]

Both specialization and diversification can be successful strategies in the insurance business. In fact, diversification is one of the fundamentals of our business because it helps spread risk, which allows for the shifting of risk for reasonable pricing. Diversification can be accomplished through a variety of approaches, including line of business, product line, geographic concentration and distribution diversification strategies. Certainly no one would argue that diversification is not imperative in writing catastrophe exposed property insurance. However, specialization is also a... -�[Read�more]

A Wall Street Journal article, A Small Bank Juggles Its Roles, provides an interesting perspective on the different challenges facing community banks. The article notes that smaller banks have a better loan profile, at least by one measure: As of Sept. 30, the percentage of their [community banks] loans 90 days or more behind was about 1.9%, versus 2.4% at larger banks, according to the Federal Deposit Insurance Corp. (A year before, the percentage was around 1% for all banks.)... -�[Read�more]

The New York Insurance Department has issued an opinion (see here) requiring admitted Directors and Officers liability (D&O) insurance policies not have a provision placing a duty to defend on the insured. A D&O liability policy may not include a provision that places the duty to defend upon the insured, rather than the insurer Two D&O experts, Kevin LaCroix of The D&O Diary and Carrie Cope of the Tressler, Soderstrom Maloney & Preiss law firm, have pointed out flaws in... -�[Read�more]

Captive insurance companies are a critical risk management tool for both groups and individual owners. Captives are estimated to write, one way or another, approximately 25-30% of the commercial insurance market. A recent study by Marsh, entitled “Next Generation Captives: Optimizing Opportunities,” (see here, here & here) surveyed 900 of the estimated 2,750 captives owned by public companies worldwide. Some key points: Premium written by this group totals $55-60 billion While all of the Dow Jones 30 own captives, middle... -�[Read�more]