ARCHITECTS & ENGINEERS

In 2024, the market has seen mild softening but looks largely similar to 2023. A few specific programs are making significant rate changes due to gross underpricing in recent years. This is intended to support better align with the marketplace. Claim history remains the single largest factor in renewal pricing outcomes. Contractors Professional/RE Development markets are entering the space with newer MGU’s showing interest, which should hold rates steady with flat to single digit increases for emerging and middle market accounts. An increase in revenues/fees is driving some premium increases in areas of the country that are seeing population growth and new construction. Larger accounts and contract specific limits still present issues. While rate increases are less common in the Midwest, single digit rate increases of 3% - 10% are expected on accounts in certain jurisdictions such as NY, CA, and FL or on difficult classes including Geotech, Structural, Soil, and Residential Condos because claim severity remains elevated. Many insurers are limiting capacity to $2M - $3M on tougher disciplines (i.e. Geotech, Structural) and tougher project types (i.e. residential). Standalone project policies are hard to come by, especially if there is any condo exposure. On smaller clean business, competition is higher and rates are expected to remain flat or rise up to 3%.

CRIME

Pricing will remain stable as new entrants join the marketplace. Social Engineering coverage is readily available with most underwriters seeking limits of up to $500,000 or $1M. Coordination with the Cyber Crime policy for Social Engineering/ Deception coverage is necessary. Which insurer is going first and whether the limits are stacked or sharing the largest single limit remains generally unsettled in marketplace. However, whenever possible, the standalone crime policy’s other insurance clause should be negotiated to provide primary status as coverage is on an each and every claim basis without a policy aggregate while most cybercrime insuring agreements are subject to an annual aggregate sub-limit.

CYBER

Despite the current softening in the cyber marketplace, disciplined underwriting is still the name of the game for seasoned markets. Many industry leaders are predicting cyber pricing will firm sometime in 2024 as ongoing increases in ransomware claims cannot be ignored indefinitely by the markets. While APIs are being widely used to place cyber business, many accounts currently with seasoned incumbents are still being closely reviewed at renewal. There is some caution being used on small enterprise accounts. Middle market risks with strong security controls and no claims history are renewing at lower prices, especially if there is a change in carrier. Many newer market entrants are seeking to expand their market share, and standard markets have resumed putting up larger limits so there is less need for excess placement.

Underwriters are still looking for strong security posture on all accounts, including affirmative controls for Multi-Factor Authentication (MFA) with particular attention to web-based email and privileged user accounts, Endpoint Detection & Response (EDR), backup strategy and process, email security filtering tools, data encryption, and Remote Desktop Protocol (RDP). While insurers want to see the more advance controls, some are backing off slightly from 2023 standards on smaller business with under $50M - $100M in revenue. However, larger accounts are still held to the higher cyber control standards.

While claim volume remains high, some price decreases are being seen as many markets are now more efficient around claims handling and breach response, which is helping reduce costs. Most markets are also re-evaluating and expanding risk management loss control services as more insureds are utilizing such services, which creates a better underwriting position for both small and large accounts. Accounts without a strong security posture or those in higher hazard classes such as healthcare, law firms, financial institutions, and municipalities should watch for sub-limits on ransomware.

D&O: DeSPAC & SPAC

Activity in this sector has slowed significantly, but it is possible for more deSPAC transactions to occur in future, so obtaining appropriate coverage is still a wise investment. There are several serious issues to be considered and coverage pitfalls to avoid that can make a significant difference in both the ability to obtain coverage for a claim and the amount of coverage available. Agents should make it a point to reach out to a qualified broker to discuss coverage if a private company insured becomes the target of a SPAC.

D&O: PRIVATE/NON-PROFIT

The soft market continues into 2024 as 5 - 6 new markets joined the space near the end of 2023, which contributes to greater available capacity. How long competitive pricing will last is unknown. Excess is likely to remain highly competitive. Online capabilities continue to grow. Ongoing global conflicts, inflation, and financial difficulty due to higher interest rates, and political elections could impact the D&O market in 2024. The early part of 2024 may see continued flat rates and lower pricing on claim-free accounts with strong financials. Carriers are still expected to compete on coverage. Many enhancements can be had in this soft market such as removal of the anti-trust exclusion or granting of anti-trust sub-limits, higher sublimits on derivative demand investigation coverage, etc. Healthcare, financial institutions, and education sector insureds will still garner higher premiums, closer underwriter scrutiny, and will not only have difficulty in obtaining enhancements as the competition is not as strong (especially in healthcare), but may have difficulty in removing restrictions when it comes to antitrust or regulatory coverage and will see larger retentions for high wage earners. It will also be important to keep an eye on cyber exclusionary issues, including BIPA and unauthorized access, especially in the healthcare space.

D&O: PUBLIC

Public D &O is beginning to flatten out and capacity remains at an all-time high. A few markets are beginning to avoid accounts that have reached minimum rates per million. Some carriers who have previously passed on quoting primary coverage in prior years are now quoting the primary and may come in under the expiring in some risk-specific cases. There is more interest and competition on the primary; therefore, premiums should be flat to down 5% on accounts with no issues (i.e. financials, claims, certain classes). The primary market is much more limited than excess, specifically it’s constricted to market leaders providing the broadest terms and conditions. Very few primary restrictive terms and conditions are being implemented by market leaders.

Excess premiums will still feel pressure due to plentiful capacity attracted to those layers. Retentions have been coming down and will continue to do so for best-in-class accounts. Market capitalization size is still the primary determinant of retention levels. A lack of IPOs and the near disappearance of SPAC / de-SPAC accounts continues to stress a market that is hungry for growth. There is substantial imbalance between the number of carriers available and the number of publicly traded companies as the supply of publicly traded accounts continues to shrink based on fewer IPOs and the normal attrition of accounts due to M&A activity. The last couple of renewal cycles have taken their toll on premium. Adjustments are likely to be more account specific in 2024 with the size of premium reductions largely determined by market competition and how much the market has given back over the past 18-24 months. Reinsurance requirements may play a role in premium pressure for some, but to what degree remains unclear. Coverage issues to watch for in 2024 include proper allocation language for companies headquartered in a state with unfavorable state laws on allocation, batch/deemer clauses, Side A match, and options for entity investigation.

E&O

In 2024 the marketplace should look very similar to 2023 with some rate softening. Some insurers that have declined in prior years have come back into the marketplace for 2024, even on tough classes like franchisors. MPL rates should be relatively flat as emerging market business is still competitive with newer MGA entrants adding capacity for less volatile classes. However, with revenues typically on the rise along with the cost of goods and services, premiums are increasing from markets that consider top line revenue.

The lawyers market is segmented by size and Area of Practice with tougher AOPs including intellectual property, entertainment, and mass/class settlements. There is competition for middle market accounts (10 - 40 attorneys). Smaller firms (fewer than 10 attorneys) and larger firms (40+ attorneys) are harder to place as not as many markets are willing to lead. Excess is still extremely competitive.

EPL

EPL rates remain competitive on clean accounts. While most renewals are coming in flat, it is possible to get underwriters to apply decreases of 5% - 10% in some instances. Underwriters have been increasing retentions, which will likely continue in 2024. Specifically, several carriers added larger retentions for highly compensated individuals in 2023 and more markets are expected to follow suit in 2024. Several carriers are beginning to offer BIPA sub-limits. Not all markets freely give this coverage – it may have to be requested and/or require additional underwriting. Tough classes include healthcare, auto dealers, restaurants, staffing agencies, and lawyers. California EPL rates have cooled off and most clean account renewals are flat unless there has been growth. California premium and retentions are starting to stabilize. FLSA and IRCA defense sublimits are available on most accounts unless there are specific prior claim issues.

FIDUCIARY LIABILITY

Fiduciary carriers with experience and expertise in fiduciary claims continue to underwrite fiduciary accounts cautiously. They are seeking to manage limits and require retentions for accounts with excessive fee litigation exposures (if not done previously), but not in the range requested in prior years. Rate increases for fiduciary insurance are minimal. Many current fiduciary policy renewals are occurring closer to expiration due to the soft market. Excess fee and performance lawsuits filed in 2023 declined relative to the extraordinary filing levels in 2022, but excess fee lawsuit filings remain elevated. In contrast to prior years, in which plaintiff’s attorneys seemingly targeted benefit plans of all sizes, in 2023 excess fee lawsuits primarily targeted companies with larger benefit plans. The number and aggregate total value of excess fee lawsuit settlements in 2023 reached record levels. Insureds without any excessive fee issues have the ability to secure quality fiduciary insurance with good rates and terms given the healthy state of the current fiduciary market.

FINANCIAL INSTITUTIONS

2024 will mirror 2023 in many ways. There have been a few new market entrants, so the space is expected to remain competitive. Financial institution professional coverages remain a consistent concern for more challenging classes (i.e. depositories, insurance carriers, specialty lending institutions, and broker-dealers) as appetite remains limited for lead bankers professional, insurance company professional, broker-dealers, and non-bank lenders liability. The market for depositories is more challenging due to concerns over recent FDIC takeovers and forced sale of non-core assets to raise capital to meet re-emerging stress testing by regulators. If the balance sheet and depositor base are stable, then rates are remaining flat or seeing only slight increases in the E&O aspects like BPL and non-bank lenders liability. The community bank space is hardening a little due to movement towards MGA/MGU programs and away from standard domestic markets as interest in lead placement is limited. Reinsurance participants are being considered for ICPL. Asset managers/investment advisors are competitive with most underwriters focusing capital there.

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