Specialty Insurers Unveil New Offerings

In spite of softening pricing conditions over much of the property-casualty market, specialty market participants continue to grow their top lines through innovation--with new product offerings and coverage improvements.

Some product enhancements announced in recent months include:

o Increased Terrorism Capacity:

Earlier this month, Lexington Insurance Company--a member company of American International Group Inc.--announced it had increased its capacity of commercial domestic property terrorism insurance to $250 million, more than double the prior $100 million.

Lexington's increased capacity is available for commercial property with extended business exposures, including central business districts. The $250 million in capacity will be available not only for commercial buildings, but also for municipalities, retail spaces, office buildings and hotels as well. The new capacity is available for stand-alone and embedded coverages.

For more information, contact George Stratts, division executive and executive vice president of Lexington Insurance, at george.stratts@aig.com.

o Early EPL Claim Reporting Incentive Endorsement:

Early in February, The Chubb Group of Insurance Companies in Warren, N.J., rolled out an optional endorsement for employment practices liability policies that provides customers with a 10 percent reduction (up to $50,000) in their deductible if they notify Chubb within 15 business days of an employment claim--including administrative charges filed with the Equal Employment Opportunity Commission.

The reduction is available for each claim reported during the policy period.

"Almost 80,000 charges are filed with the EEOC annually [and] some EPL policyholders may not realize that each of these charges is an employment practices liability claim," Catherine Padalino, worldwide EPL product manager, said in a statement announcing the endorsement.

"If a company fails to report an EEOC charge in a timely manner..., the insurer may deny the claim due to late notification," she continued, noting that by encouraging early reporting of claims, Chubb not only helps eliminate that problem, "but can save our customers money as well as help them mitigate potential litigation costs and reputational damage."

o Investment Banking Engagement Insurance:

In January, AIG's National Union Fire Insurance Company of Pittsburgh, Pa., announced the launch of Investment Banking Engagement Insurance--a new type of professional liability policy for investment banks to insure a specific transaction against errors and omissions claims.

National Union said the policy can be used for any type of investment banking engagement, including raising equity and debt in the capital markets, as well as providing advisory services for mergers and acquisitions.

"Currently, market capacity for E&O coverage for the investment banking community is very limited, despite strong demand," said Scott A. Meyer, president of National Union Financial Institutions Group.

The transaction-based approach can allow midtier banks, which may be very vulnerable to an adverse E&O event, to secure customized coverage, the company said. Limits of up to $25 million are available.

o Liability Coverage For Computer-Intensive Businesses:

In late January, Chicago-based CNA announced the launch of NetProtect Essential--an insurance product providing liability coverage for privacy and identity theft, along with a range of other network security-related exposures.

Targeted to small- and midsized companies, NetProtect Essential covers all network resident information enterprisewide, not just Web sites, CNA said in a statement.

The policy responds if there is a security breach resulting in identity theft or disclosure of private information, damage resulting from viruses, inability to access a network or rely on information. It also covers unauthorized acquisition of trade secrets and proprietary or confidential information from the insured's network.

NetProtect Essential is admitted coverage that applies worldwide and is currently approved in 40 states.

Available with limits up to $2 million, it is designed for U.S.-domiciled businesses that typically generate gross revenues of less than $100 million in various industries, including financial services, health care and life sciences, retail, manufacturing, construction, hospitality, telecommunication and technology.

"For more than a year, privacy breaches and identity theft have made national headlines," said John Wurzler, vice president, CNA's Technology Commercial segment, in a statement, noting that coverage for related exposures has generally been out of reach or too expensive for all but the largest companies.

o Revamped Lawyers Professional Coverage:

In mid-January, Deerfield, Ill.-based Shand Morahan & Company Inc., underwriting manager of Evanston Insurance Company, announced the launch of a revamped Lawyers Professional Liability program.

The program is now called Designed Protection for Law Firms.

Targeting hard-to-place attorneys and law firms, the updated program features a new, more competitive policy form and application, as well as the addition of three risk management enhancements.

The risk management components, which are available at no charge to policyholders are:

o A confidential telephone hotline that is staffed by a panel of attorneys with expertise in risk management for the legal profession, and defense of lawyers' professional liability claims and ethics-related state bar disciplinary proceedings.

o A lawyers' risk management guide detailing 80 core risk management strategies specifically targeted to law firms and attorneys.

o A professional practices guide that is applicable to a wide range of nonmedical professionals. The guide is comprised of 230 strategies across a broad array of 75 different high-impact topics that include claims mitigation, client relations, marketing and firm profitability.

o Network/Privacy Protection For Health Care Organizations:

In mid-December, Farmington, Conn.-based Darwin Professional Underwriters Inc announced the expansion of Tech//404--a liability product for health care organizations--in response to increasing exposure to network security and data privacy losses.

Tech//404 for health care organizations addresses the exposures of both technology and enterprise information risk in a single, comprehensive insurance policy, the company said.

Explaining the need for the coverage, Darwin PRO said that with the introduction of electronic medical records and software-enabled medical care, hospitals are becoming their own data warehouses with a much greater sensitivity to network intrusions and interruptions.

In a statement, Drew Bartkiewicz, assistant vice president and lead underwriter for Darwin's technology and information liability group, pointed out that the product is designed to protect companies from exposures like the Sept. 6, 2006 security breach at Akron Children's Hospital in Ohio during which files of some 230,000 patients were accessed and sensitive information, including Social Security numbers and bank account records, were stolen.

Liability relating to network outages and regulatory violations for data privacy are also contemplated in Darwin's Tech//404 program.

The program covers:

o Notification expenses under regulatory requirement to warn of security breaches.

o Fines, fees or penalties arising from privacy or consumer protection errors.

o Errors and omissions for delivery of technology professional services.

o Network security protection, unauthorized access and rogue employee coverage.

o Breach of privacy, including third-party liabilities.

o Malicious code, cyber-attacks and inadvertent transmission of viruses.

o Optional contingent bodily injury, crisis management expense and cyber extortion.

Businesses eligible for Tech//404 for health care organizations include: ambulatory surgery centers, health care data processors, health care software providers, image delivery systems, long-term care facilities, physicians groups, hospitals, managed care organizations, third-party administrators, pharmacy delivery systems and others.