Shop Around: What’s Out There?

There’s hot competition in agency errors and omissions market today, in price, policy terms and conditions. Most experts believe it’s a great time for agency owners looking to purchase or ramp up their limits. But most agency owners don’t shop coverage and few increase their limits it seems

“There is a tremendous amount of capacity in the marketplace currently,” said Mark J. Mullarkey, executive vice president at RT ProExec.

While rate has stayed consistent over the past couple years, there’s also heightened competition around terms and conditions in agency E&O, which could be great for agency owners.

According to Insurance Journal’s 2016 Agency E&O Survey, average E&O premium increases over the past three years rang in at 9.9 percent for those policies that increased, but overall E&O policy premiums are holding flat or decreasing (see report on page 24).

“At this point, there’s market availability for any size and any type of agency out there,” Mullarkey said. “I haven’t run across anything where I haven’t been able to come up with a quote.” Of course, every market has their likes and dislikes, but there’s a market for everyone, he said.

What’s surprising is that even in such a competitive buyer’s market agency owners tend to keep the same limits they’ve always held. The E&O Survey showed that just 10.5 percent of buyers increased their limits at the last policy renewal.

As agencies continue to grow, they should think about increasing their limits and an ideal time to review is at the E&O renewal, Mullarkey said. Right now, it can be very inexpensive for agencies to almost double their limits.

It’s also a good time to keep an eye on cyber and privacy related exposures, Mullarkey said. “Some carriers are starting to include sublimits on their E&O policy for the cyber privacy exposures while some carriers are remaining silent on it,” he said.

What is known is that carriers are thinking about cyber as it relates to agency E&O.

Mullarkey said stand-alone cyber coverage would be ideal, but it’s better to have some coverage on the agency E&O policy than nothing at all. “But usually it’s sublimits, not at the full limits,” he said. “Separate is better, but at the end of the day, something is better than nothing.”

Terms and conditions overall are one of the top issues agency owners should consider negotiating in today’s competitive agency E&O market. Why not? Now’s the time to look.

“I don’t want to kid ourselves, price is always going to be a very important buying decision for the agency,” said Mullarkey. “But if I’m an agency principal or agency owner, it doesn’t hurt to shop and look around to see what else is out there.”