What Rapid Changes in Umbrella and Excess Liability Markets Mean for Policyholders
One topic that we are following quite closely at Rose & Kiernan, Inc. are rapid changes in umbrella and excess liability markets and what these changes mean for policyholders. Last year, an article was published in Business Insurance Magazine that said “umbrella and excess liability risks have seen the biggest changes as rates and premiums rise and capacity is withdrawn.” Well into 2020, the market continues to change. (Also note that it is too soon to determine the full impact of COVID-19 on the commercial property and casualty insurance industry.)
What is accounting for these changes and disruptions? According to Insurance Journal, social inflation is a “key factor driving rate increases in the liability marketplace.” Juries are awarding higher values for claims across the country. In addition, “the excess and surplus lines market has underpriced its products as medical trends and costs escalated, jury awards continued to increase, and trends including opioids, gun litigation and wildfire emerged” said Derek Broaddus, senior vice president, excess casualty manager, for Allied World Insurance Co. in Business Insurance Magazine.
For brokers and policyholders, note we are in this together. We both face the challenge of rising premiums and while rates have gone up, capacity limits continue to shrink. But there is some good news. There are still plenty of carriers in the umbrella and excess liability markets. At Rose & Kiernan, Inc. we will continue to follow the rapid changes in umbrella and excess liability markets so that we are able to communicate with policyholders on what these might mean and how we might work together on setting appropriate pricing and expectations.
Of course, it is important to remember why umbrella and excess insurance are necessary for many businesses in the first place. General liability insurance coverage protects your business when something happens to someone else. Such policies provide money for damages in the case of injury or expenses associated with the claim including investigations, legal representation, etc. Umbrella and excess insurance are there in case a judgment is not covered by the general liability police or if the judgment exceeds the policy limit. (And remember that umbrella and excess insurance policies are both designed to work as additional layers of insurance coverage, but they are not the same. This article from Insurance Journal provides a good overview.)
We’re always here for your umbrella and excess coverage needs. If you have any questions about umbrella and excess liability or business insurance, please contact Rose & Kiernan, Inc. here or by calling 800-242-2433.