Professional liability claims and coverage is evolving, according to Steve Whelan, director of management/professional liability product development for ISO. With increasing cyberattacks, comes coverage for ransomware and even blended coverage with other lines. Among other trends, healthcare claims are expected to grow in conjunction with an aging population.
During an audio interview with Claims Journal, Whelan discussed these trends in detail.
He explained that inclusive of management and professional liability products, directors and officers (D&O) liability and cyber liability are the two getting the most media attention right now.
On the public company D&O side, he said there’s been a large increase in securities class actions. There were approximately 270 class actions filed in 2016, and already this year 219 have been filed, he said.
“That is an alarming amount of securities class actions against public companies. The directors and officers liability market is very competitive, and the rates have not moved in coordination with the amount of securities claims that have been filed,” said Whelan.
Many are related to mergers and acquisitions. The two industry segments targeted quite a bit, he said, are biotech and healthcare firms.
In employment practices liability, carriers are seeing more wage and hour claims.
“There’s certain states that seem to be more litigious than others in that area that has a high focus,” said Whelan.
A new aspect to employment practices liability are active shooter policies.
Carriers are revising cyber liability policies, said Whelan. He said ISO recently announced its revamped policy which can be attributed to the large increase in ransomware attacks and data breaches.
On the professional services side, Whelan said there’s been an increase in consumer protection claims.
“A lot of those claims are brought on the Fair Debt Collection Practices Act, the Fair Credit Reporting Act and the Telephone Consumer Protection Act,” said Whelan. “How the industry is responding, from many of the people that we’ve talked to, is either excluding coverages for those exposures or limiting coverage for them with defense clause only or sub limits under their policies.”
Another risk for professional services is social media related to the increased ease to disseminate information to anyone, he said.
“There’s also increased personal injury libel or slander exposures due to tweets back and forth or even on an own company’s app or website that allows comments to be made,” he added.
Certain businesses are typically at a higher risk for a professional services claims. These include lawyers and home healthcare.
“In particular, the rise in the aging population and looking at the exposures and trying to address the exposures with the increase in home healthcare,” he said. “There’s many, many different types of professions now that are affected by that world with either ambulatory services, transportation back and forth, delivery of medication, delivery of supplies, the exposure of getting the wrong dose or the wrong medication.”
Also noted, was a higher risk for potential class action exposure in franchiser errors & omissions (E&O) claims. Third party administrators also face a higher exposure.
“Their failure to comply with stop loss notification requirements and miscalculation or underestimation of payouts or contributions has been an exposure that we see continuing,” said Whelan.
Policies have changed to reflect emerging trends and risks.
Forms have evolved in E&O and cyber policies, he said. For example, cyber policies which, in the past, dealt with notification expenses resulting from a data breach now address social media and ransomware expenses.
“We are seeing policies in all of the management and E&O blending coverages right now. You see cyber liability being added into business owners policies. In some D&O cases, it’s being added in as a coverage. There is a blending and there is an evolution strictly related to cyber liability that is evolving from what it was 10 years ago,” said Whelan.
As for employment practices liability policies, he said insureds are adding coverage for wage and hour claims onto EPLI forms or as a standalone coverage.
“We’re also seeing on private company policy forms, which generally do have blended coverages, whether that be the D&O, the employment practices, the fiduciary and the crime, now adding in some type of E&O coverage or in many cases cyber liability coverages starting to evolve into those policy forms as well,” Whelan added.
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