Recent Factors Affecting Professional Liability Claims and Costs - Huntersure

Recent Factors Affecting Professional Liability Claims and Costs

Posted on: September 5, 2019 by Huntersure LLC.

There are a number of factors that play a role in professional liability risk insurance. From economic issues to nationwide litigation trends, the professional liability insurance market can change at the drop of a hat.

In 2019, financial and professional liability insurance rates in the U.S. increased by seven percent and will probably continue to rise. And while pricing for directors and officers insurance over the previous few years has continued to decrease, this year has seen a number of new trends converging that will challenge the professional liability insurance market and reverse those trends.

Professional Liability Insurance

While the market itself may be hard to read at times, having professional liability insurance is still a must to protect companies, law firms, architecture design firms, and individual employees from the risks that come with running a business. Not having professional liability insurance will open the door to a number of risks that can potentially provide long-term issues.

Here are some factors that could lead to rate increases in the professional liability insurance market to look out for.

Economic Volatility

Corporate balance sheets can take a hit by the fact that corporate debt has gone up due to the environment of low interest rates of the past 10 years. Combined, this means that companies may have to rethink how they go about financing themselves. If they were previously financing through debt, then interest rates that are on the rise may inhibit their availability to access credit markets.

Policy Pricing

Pricing for directors’ and officers’ insurance policies have gone down by about 15 percent over the past five years. An increase in claims and litigation have driven up both claim frequency and severity of policy prices, but a boost in capacity has had a positive effect on pricing.

New Employment Practices

Class action lawsuits against companies when it comes to employment practices saw an uptick in 2018. From the #MeToo movement to surgery, like in the transgender community, employer-sponsored health claims have increased the volatility of the professional liability insurance market for companies.

The legalization of marijuana has also posed another challenge for companies with professional liability insurance. This has brought up workplace safety issues as well as productivity and liabilities around operating in a legal marijuana environment.

Forum Shopping

The Supreme Court has overseen more class action lawsuits due to the Securities Act of 1933, stating that class action suits can be brought in state as well as federal courts. Jury awards and settlement amounts are rising higher and higher with each claim and multi-million dollar settlements aren’t uncommon.

This creates an opportunity for forum shopping as well as multiple situations where cases arise out of the same event occurring in the same time period. As a result, litigation against directors and officers will become more frequent in the coming months.

While things can change quickly, given the number of factors, those who are insured should be sure to understand the changes in the professional liability insurance market as well as how these factors and others impact the scope of coverage and pricing.

About Huntersure

At Huntersure, we specialize in providing quality professional liability solutions to accounting professionals. Our Accountant Liability Insurance program provides coverage for accountants, auditors, bookkeepers, and tax preparers, so no matter where your clients lie in the industry they can have the coverage they need to protect themselves and their assets. To learn more about our operation and our Professional Liability Insurance solutions, contact us today at (855) 585-6255.

Posted in: blog Professional Liability