Gradually, over the last 4+ years, several management liability insurance (“MLI”) carriers have shifted their underwriting appetite/guidelines for their non-profit and privately-held insureds nationally; most dramatically in California. These changes have included some combination of one or more of the following:
This is quite a change, as for the previous 10+ years there has been a surplus of capacity and MLI carriers were eager to write these accounts at very attractive rates and terms. While there are still numerous MLI carriers with significant capacity, including some new entrants, the marketplace appears to be reaching a point where this capacity will no longer be utilized to offer the terms and pricing that we had been accustomed to seeing. All of this begs the question, “Why is this happening?” Based on our conversations with MLI carriers in this niche, here are a few of the reasons:
What can our current (and new) non-profit and privately-held management liability insureds expect as a result of the changes in the marketplace?
Our recommendation is to set expectations as follows:
Since 2010, Socius has been advising our clients that the MLI market appeared to be trending toward a hardening, following on the heels of numerous years of softness. As we get deeper into 2015, we continue to believe that this is the case. The gradual transition which we initially described has in fact taken firm hold, and has gained real traction. We hesitate to pronounce the market as officially “hard” only because we hear rumblings which suggest that – as we head into 2015 market conditions could very well deteriorate further making what we consider hard today even “harder”. For the moment, the watchword to agents and brokers is: “Manage expectations! Difficult news is coming, so let clients know early – and often.”
As always, please don’t hesitate to contact your local Socius representative for further details related to appetite changes of any specific management liability markets.