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Survey Report

Insurance Marketplace Realities 2019 — Errors and omissions

Financial, Executive and Professional Risks (FINEX)

November 6, 2018

Cyber remains the main driver in this space, resulting in small price increases.

Rate predictions

  Trend Range
Errors and omissions No change or slightly up Flat to +5%

Key takeaway

As professional services firms continue to leverage technology, claims alleging a failure to properly render those services are increasingly overlapping with traditional cyber coverages.

Traditional E&O market capacity continues to erode as carriers focus on underwriting pure cyber risk.

  • We expect small price increases for clients with significant professional services offerings.

Insureds should review their E&O exposure and existing coverage, if applicable, as part of their strategy to address growing cyber exposures.

  • Companies should review the limitation of liability and indemnification clauses in their customer contracts, as underwriters are more closely scrutinizing these provisions, especially as they relate to unforeseen cyber risk exposure.
  • Further, as a best practice, when insurance is required in a customer contract, the type of insurance (E&O and or cyber) should be specified.
  • Companies should review customer use policies and guarantees regarding any estimated or guaranteed service availability.

Carriers are growing increasingly sophisticated in their underwriting.

  • Insurers have tightened pricing and retention guidelines for companies offering just-in-time services or guaranteed uptime or output time in their service contracts.
  • Certain carriers are limiting or restricting certain classes of business in response to large recent claims.
  • Carriers are reviewing and examining their exposure to intellectual property risk and are reviewing insureds’ intellectual property clearance procedures to understand the risk of third-party intellectual property claims.
  • Although carriers continue to accept manuscript policies to directly address professional services risk, they are beginning to increase premiums for these policies.
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