Top Markets to Watch in 2015
Insurers were busy trying to stay ahead of the curve when it comes to creating products for the top markets in 2014, and they don’t seem to be slowing down this year either. Read on to find out what some believe will be the top markets of 2015 and why. To read the full report, including a listing of new markets launched in 2014 for each sector, visit MyNewMarkets.com.
Healthcare
The healthcare industry has undergone monumental changes and consolidation in recent years, and insurers have scrambled to tailor their products to the new risks and exposures that have emerged as a result. 2014 was a busy year for insurers as they reorganized their healthcare liability divisions and developed coverages for the new healthcare landscape. Don’t expect 2015 to be any different.
“The market is moving from very conventional, silo products, to more of an integrated risk profile and it’s important that we have not just products but solutions that respond to that,” said Matt Dolan, president of IronHealth in Simsbury, Conn.
In April, IronHealth enhanced its Healthcare Professional Liability (HPL) insurance product with increased limits of $50 million and a broader scope of coverage. The coverage also now includes individual limits for affiliated physicians.
Consolidation will continue in 2015 as well, which Bill McDonough, CEO of Midwest medical professional liability carrier MMIC predicted last year will actually increase business opportunities for agents.
“There will be more care provided by physicians assistants and nurse practitioners, for example, and agents haven’t typically been very active in that market so that’s an opportunity for them,” he said. “Agents and brokers either focus on hospitals or physicians — they are not looking at both. But they need to look at this as a dynamic market … there are a lot more opportunities than they realize.”
Energy
If 2014 was any indication, underwriters have big plans for the energy market in 2015. In fact, a few companies have already rolled out new products and additional capacity to this dynamic segment.
Insurers are expecting big growth from energy industries in the coming years and are looking to catch some of the new business that will come from that growth.
“According to the U.S. Census Bureau and the Energy Information Administration, U.S. natural gas production will rise an estimated 44 percent over the next 30 years and non-hydropower renewables will increase by 4.1 percent in 2014, which are clear indicators of industry-wide growth,” said Mary Hughes, president of Construction/Energy for ProSight Specialty Insurance, which launched three insurance programs for solar energy contractors, propane and fuel dealers, and oil and gas contractors last May.
Hughes said ProSight views growth in the energy segment as an opportunity to partner with businesses and offer options beyond what is provided by standard line insurance companies.
However, underwriters say this class isn’t for everyone.
“Power is one of the fastest growing segments in the U.S.,” according to Tom Fitzgerald, CEO of Aon Risk Solutions’ U.S. retail operations. “Between rapid expansion and growth, legislative, regulations and supply chain complexity, power and utility operators need a partner with an intimate understanding of the unique risks they face every day.”
Mark Fishbaugh, practice leader for Aon Risks Solutions, spoke with Insurance Journal’s sister publication Claims Journal last year about the fact that the energy segment creates a very complex underwriting process that requires industry-specific expertise. All new entrants are not created equal.
“You have to have the loss engineers, claims handling experts and loss prevention services to understand this risk well,” said Fishbaugh. “When you develop something new, the less history you have on it, the greater you have for the uncertainty of loss in the short-term and the long-term.”
Cyber Liability
The cyber insurance market has gotten more sophisticated and in-demand every year and there’s no reason to believe 2015 will be any different.
Not only did insurers expand their cyber liability insurance products with higher limits and more services in 2014, but many also developed more segment-specific programs.
Experts believe this is the way this market will continue to go, as all industries face increasing cyber risks and need more customized coverage.
“Within the next 12 to 18 months we’re going to start seeing insurers rebuilding industry-specific products for cyber. At the moment, typically, there is just a generic product that is sold to all different types of businesses. But every industry sector is different and has different exposures,” Graeme Newman, marketing director at London-based CFC Underwriters, told Insurance Journal in July 2014.
Newman says he also expects more insurers to address the business interruption element of a cyber-breach in their policies going forward.
“The [current cyber] products have actually been focusing a lot on security breaches. As a result, there hasn’t been a lot of innovation in the business interruption coverage. I think cyber, particularly in the U.S., has become synonymous with privacy. In fact, the policies have all focused around that particular area,” he said. “I think that’s changing. I think clients are becoming more sophisticated. Clients understand there’s much more to a cyber policy than just the privacy component.”
Aspen Insurance Co. CEO, Mario Vitale, told Insurance Journal in November 2014 that the insurance industry has to get better at both risk management and at creating cyber-related business interruption products, which is probably the hardest to underwrite, he said.
“You have a brand reputation part of it, the restoration process, and of course, the next part of it is business interruption. As an industry, we’re still all struggling to put our arms around that and how we can find some creative solutions for our clients,” Vitale said.
Some companies have touched on this exposure with coverage enhancements and endorsements, including Marsh, NAS Insurance Services and others.