Insurance Marketplace Realities 2024 – Errors and omissions

Rate predictions: Errors and omissions

	Trend	Range
Large law firms, primary layer		+3% to +10%
Large law firms, excess layers		+5% to +10%
Mid-size law firms		Flat to +10%
Management consulting firms		+10% to +20%

Lawyers

• At the primary level, rates have stabilized with continued upward adjustment at lower levels to address claim inflation. Portfolio increases are yielding back to individual risk underwriting. Competition is emerging and, as a result, legacy underwriters are negotiating. Underwriters still seek higher rates for firms with poor claim history, high-risk areas of practice or poor risk management controls. Many underwriters now regard large law firm first excess layers as a working layer needing pricing more in line with the primary layer. This is pushing up total program cost. Excess insurers are recalibrating their rating models to address recent, severe losses that have penetrated multiple layers for a significant number of firms. Portfolio increases are now common with excess layer pricing and are often higher than primary layer price increases. Capacity reduction is being used more aggressively by excess insurers to find a way back to long-term profitability. Current price levels are likely to escalate further if the large potential claims the market is following closely move to equally large losses.
• There are several new law firm professional liability markets with experienced underwriters that are creating competition on both the primary and excess levels. New markets tend to enter at or near the top of rate cycles.
• Carriers are continuing to push for higher retentions using a firm’s revenue as a guide to do so.
• Coverage is steady. Most firms are maintaining existing coverage and occasionally achieving enhancements.
• Underwriters are paying particular attention to:
  • Artificial intelligence (AI) including Chat GPT — specifically how firms are managing this risk
  • Indemnifications in outside counsel guidelines
  • Return to work
  • Whether firms have strong cyber risk management controls and purchase cyber coverage in addition to their professional liability coverage.

Consulting firms

• Underwriters have continuing concerns with consultants working with clients in the tobacco and opioid industries, particularly with consultants potentially crossing the line into proposing or operationally supporting high-risk strategies for regulated or high-risk products.
• Like law firm underwriters, consultant underwriters are paying close attention to insureds that are working with governments under sanctions and that have plans in place to address these situations.
• Several markets that offer consultant E&O coverage believe that it has been underpriced for several years and continue to strive for rate adequacy given the increased severity in consultant claims.

Technology

• Evolving product and service delivery technologies are pushing the edges of technology E&O into other coverages, including general liability, cyber and other types of professional liability.
• Internet of Things (IoT) devices are interacting with people, property and equipment in ways that can create new exposures.
• New property damage and bodily injury liabilities have arisen from the use of monitoring services that run on IoT technology and connected networks. These new liabilities have led to further focus on contract requirements and interactions between insurance policies.
• Carriers remain hesitant to offer excess technology coverage on blended technology/cyber programs.

Errors and omissions (E&O), or professional liability, is arguably the most complex area of specialized insurance, with several distinct marketplaces:

• Stand-alone E&O for certain professions (lawyers, consultants, accountants)
• Technology E&O, sometimes stand-alone, but often coupled with cyber insurance
• Miscellaneous professional liability (MPL), including those industries without a specific, dedicated policy form

Disclaimer

Willis Towers Watson hopes you found the general information provided in this publication informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, Willis Towers Watson offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).

Contacts

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Geoffrey Allen

Head of Professional Services Practice

email Email phone +1 818 915 4311

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Jason Warmbir

Head of FINEX Cyber & Tech

email Email phone +1 312 607 0096

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Jason D. Krauss

FINEX NA Cyber Thought & Product Coverage Leader

email Email phone +1 212 915 8374

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