Canada’s insurance industry is evolving rapidly and the professional liability space is no exception. This evolving nature does create challenges for brokers operating in what can be a highly lucrative area and, as with all parts of the industry, a commitment to continuous education is of utmost importance.
One of the biggest changes that has occurred in the professional liability arena in recent years is the number of occupations that now come under the professional umbrella. This has increased the demand for the coverage and individuals who were not considered professionals (in the insurance policy sense) five or 10 years ago – such as specialized consultants, contractors, people who put on sales seminars – are now in the market for professional liability policies.
“Anyone offering any type of service, regardless of how soft or innocuous it may seem, is being asked to provide some kind of professional liability policy in order to secure contracts,” Alexander says.
“The limits of liability being requested have also definitely increased. It’s not uncommon now for a contractor providing any kind of professional service – especially those with a provincial or regional government – to ask for $5 million and sometimes $10 million worth of E&O capacity, as opposed to $1 million or $2 million, which we were accustomed to seeing three or five years ago.”
The increased demand for professional liability policies – and higher limits – is putting pressure on brokers to secure greater capacity, which is not always easy. When an underwriter receives a file for a sales or communications consultant who earns $700,000 a year but is asking for $5m in liability coverage, their first response is always going to be, “Why?”
“It’s definitely placing more pressure on the broker,” Alexander says. “Brokers are being forced to deal with more complicated contracts and agreements – accounts are becoming increasingly complex.”
It’s not just the type of client requesting professional liability coverage that’s changed in recent years: the policies themselves have evolved. The most significant change has been the broadening of these policies, in terms of the coverage they provide.
“It’s common for professional liability policies – at the broker and insured’s request – to be tailor-made to cover certain nuances that might be specific to a certain type of professional,” Alexander says.
Alexander gives the example of a practising psychologist who wants to secure a malpractice policy for their practice, but who is conducting 25% of their counselling online or via Skype. The counsellor will want the assurance that their medical malpractice policy is explicit in its ability to provide coverage for those off-site sessions.
“The insurer might be asked to amend a policy to say the definition of professional services includes those sessions conducted by digital means,” Alexander says.
These policy revisions are directly impacting on brokers who work in the space. What might have been a typical or regular policy in the past is now much more complicated and requires significantly more time. It requires more effort and specialized knowledge from the broker in order to ensure the client has the right coverage for the service they’re offering.
“I’d advise brokers to find underwriters who understand their portfolio and the types of things they are going after,” Alexander says.
“Look for an insurer who’s willing to – and has the ability to – do some tailoring to customize coverage. That will enable the broker to present the would-be insured with something that fits their specific needs.”
In an attempt to help brokers navigate this changing space of the market, Markel has launched a portal that allows brokers to complete miscellaneous E&O risk applications online. The tool is designed for straightforward risks that would typically demand a lower premium ($2,500 for $1 million in liability and under) and provides the broker with a quick quote that they can then relay to their client.
“We have people who oversee the portal and if something is complex or comprehensive, it’s taken over by an underwriter who contacts the broker to talk about a standalone quote, instead of a standardized one generated by the portal,” Alexander says.
“If all of the information on the application is filled in properly, brokers can have a quote in as little as half an hour. Because an underwriter’s time is not being used, savings are being made, which are passed on to the brokers and the insureds. The premiums are more attractive across the board.”
As well as servicing individual clients, the portal is also extending its capabilities to offer quotes and policies for program business and professional associations. Increasingly, professionals are using these associations to get together and boost their professional liability buying power. Using the example of the psychologist once again, Alexander explains how a psychologist association may approach a broker in order to request a package from a carrier that is tailored specifically to their needs.
“We are keen on utilizing our portal for brokers to build those types of portfolio,” Alexander says. “Having online portfolios and program business automated and a little more fluid increases convenience for members. It also enables us to track the group more effectively and be more nimble.
“We do have some insurance programs here and we’re going to start placing them on the portal and make that the first point of contact. At all times a program would be assigned to an underwriter to oversee. It’s not a one-size-fits-all scenario, but it does help increase convenience.”
