Professional and management liability rates are expected to increase in 2013 by up to 10 percent, says the majority of industry professionals in a recent survey.
Specialty insurer Torus today released the results of a survey of 105 insurance professionals attending the Professional Liability Underwriting Society conference in Chicago earlier this month.
Jeffrey Grange, senior vice president, head of Professional Lines at Torus says in a statement, “2012 was a year of widespread concern over pricing uncertainty. Today, the overwhelming consensus is an anticipation of rate increases in 2013.
“While pricing increases are a positive indicator for the market as a whole, we must remember that this environment will present many challenges to producers as they manage expectations while advising their clients, whether working with small and medium sized enterprises or large, complex publicly traded institutions,” says Grange.
The survey found that the majority of respondents, 87 percent, believe management liability and professional lines prices will increase next year.
Of that number, 67 percent say increases will range up to 10 percent. Breaking the figures down further, 35 percent say they expect increases of up to 5 percent, while 32 percent believe increases will reach 6 to 10 percent.
A smaller percentage believe increases will go even higher, with 19 percent saying increases will risk by more than 11 percent next year.
Professional liability and employment practices liability were viewed as the main drivers of this line of business, 32 percent and 31 percent of those surveyed, respectively. Running close behind was directors and officers insurance with 22 percent saying that line will drive rate increases.
The survey also highlighted concerns with increased regulation and its impact on business, says Torus.
Close to half, 49 percent of those surveyed, believe the Dodd Frank Wall Street Reform and Consumer Protection Act will have the greatest impact on professional liability lines. This is a major jump over last year when 35 percent believed the legislation would have major impact, says Torus.
“The industry continues to operate in an environment of heightened legal liability and Dodd-Frank is one of a handful of pieces of legislation that we must work to better address with clients and partners,” says Sharon Raksnis, senior vice president, U.S. financial institutions at Torus.
Other pieces of legislation on the radar of insurance professionals are the Patient Protection and Affordable Care Act, with 28 percent saying close attention needs to be paid to that, and 23 percent saying the Jumpstart Our Business Startups Act (JOBS Act) needs close attention.
Concern with PPACA covered increased demand for professional liability cover for health service providers along with technology errors and omissions and privacy and network security coverage due to electronic medical records.
Regarding the JOBS act, those surveyed say they are concerned about reduced compliance and disclosure exposure impacting the D&O market, along with crowd funding and the ability of companies to advertise their private placement offerings.