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Survey Report

Insurance Marketplace Realities 2020 Spring update – E&O

Financial, Executive and Professional Risks (FINEX)
COVID 19 Coronavirus

May 7, 2020

Professional and technology service organizations should pay particular attention to the language in their indemnity agreements with customers and vendors.
Rate predictions
  Trend Range
Overall Increase (Purple triangle pointing up) +5% to +10%
Large law firms Increase (Purple triangle pointing up) +10% to +20%
Technology Increase (Purple triangle pointing up) +5% to +10%

Key takeaway

Professional and technology service organizations should pay particular attention to the language in their indemnity agreements with customers and vendors to mitigate the financial impact of potential E&O claims and losses and to be viewed as a better risk to underwriters.

Errors and omissions, 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.

Lawyers: the market for large law firms began to harden in the 4th quarter of 2018 in response to mounting losses.

  • Insurers and reinsurers have reacted to correct past rating deficiencies, respond to the new loss dynamics and regain long-term profitability.
  • For a variety of reasons, including insurer mergers & acquisitions and/or decreased appetite, there has been a reduction in capacity coupled with increased layer ventilation.

Technology: evolving product and service delivery technologies are pushing the edges of technology E&O into other coverages, including CGL, cyber and other types of professional liability.

  • Internet of Things (IoT) devices, in particular, are interacting with people, property and equipment in new ways.
  • New property damage and bodily injury liabilities have arisen from the use of monitoring services that run on IoT technology and connected networks and hardware/software. These new liabilities have led to further focus on contract requirements and interactions between insurance policies.

Other traditional miscellaneous E&O, or MPL: The marketplace is contracting.

  • Two large carriers are retrenching their books.

The overlap of cyber and E&O coverage is a major area of focus.

  • When buying cyber, buyers often ask about splitting E&O and cyber. We typically recommend combining all coverage in one policy to minimize coverage gaps, since E&O claims alleging a failure to properly render professional services increasingly overlap with traditional cyber coverages.
  • Further, in the conflict between E&O and cyber, cyber is “winning” in that more buyers are including E&O as part of their cyber programs — traditional E&O market capacity continues to erode as carriers focus on underwriting pure cyber risk.

Insureds should be proactive in reviewing their E&O exposures and existing coverage as they determine the best strategy to address growing cyber exposures.

  • When insurance is required in a customer contract, the type of insurance (E&O and/or cyber) should be specified.
  • Contractual requirements continue to drive requests for E&O coverage.
  • 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 cyber risk.
  • Companies should review customer-use policies and guarantees regarding any estimated or guaranteed service availability.
  • Technology companies should be cognizant of potential claims that could result from the coronavirus epidemic if there are failures to deliver products or services within contracted timeframes due to supply chain issues. They should understand how such claims would or would not be covered under their E&O policies.

E&O underwriting is becoming more sophisticated and complex.

  • Excess carriers are looking more closely at rates and making sure that they are getting adequate premium for the risk.
  • Insurers have tightened pricing and retention guidelines for companies offering just-in-time services or guaranteed uptime or output time in their service contracts.
  • Carriers are focusing more on middle market business and being more cautious when it comes to writing technology E&O for companies with over $1B in annual revenues.
  • Certain carriers are limiting or restricting certain classes of business in response to recent large 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.


Each applicable policy of insurance must be reviewed to determine the extent, if any, of coverage for COVID-19. Coverage may vary depending on the jurisdiction and circumstances. For global client programs it is critical to consider all local operations and how policies may or may not include COVID-19 coverage. 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 and/or other professional advisors. Some of the information in this publication may be compiled by third party sources we consider to be reliable, however we do not guarantee and are not responsible for the accuracy of such information. We assume no duty in contract, tort, or otherwise in connection with this publication and expressly disclaim, to the fullest extent permitted by law, any liability in connection with this publication. Willis Towers Watson offers insurance-related services through its appropriately licensed entities in each jurisdiction in which it operates. COVID-19 is a rapidly evolving situation and changes are occurring frequently. Willis Towers Watson does not undertake to update the information included herein after the date of publication. Accordingly, readers should be aware that certain content may have changed since the date of this publication. Please reach out to the author or your Willis Towers Watson contact for more information.

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