National Underwriter's Guide to the E&S/Specialty Lines News


Side-A Market Competition Heats Up; IDL Interest Lags

A recently published Towers Perrin survey of buyers of directors and officers liability insurance reveals a growing level of interest in Side-A coverage for non-indemnifiable D&O losses that's consistent with broker hype about market development in recent years. But the study indicates that buyers have lost their interest in a similar coverage known as Independent Directors Liability insurance.

Brokers say competition for Side-A coverage is more intense than any other sector of the directors and officers liability industry segment right now, pointing to competition on coverage terms and price, and believe there's some emerging interest in putting small IDL towers on top of D&O and Side-A programs.


This Month's E&S News

Pollution Risks At Elder Care Facilities Pose Real, But Underappreciated Threat
While thousands of insurance professionals provide insurance programs covering the unique risks of elder care organizations, few have recognized the potential financial impact of failing to insure pollution risk, according to John Butler of Program Brokerage Corp. Even conditions not often considered as pollution, such as fumes from freshly applied paint, can put fragile resident populations at risk, he explains.

Madoff's Insurance Broker Gives New Details of His Coverage
Bernard Madoff could not be convinced to buy professional liability insurance for his investment services, but legal requirements did force him to purchase a fidelity bond, a specialty broker revealed at an industry conference earlier this month.

Crime Policies Give Slim Cover For Mortgage Fraud, Ponzi Schemes
Crime insurance and fidelity bonds provide only limited protection to financial institutions and other insureds seeking to recover losses from fraudulent operations like mortgage scams and Ponzi schemes, experts say.

Link Found Between Chinese Drywall And Corrosion
The latest government study on Chinese drywall has revealed a "strong association" between the drywall and corrosion in homes that may physically irritate their residents.

Capacity Trumps All Other Issues Fueling Persistently Soft D&O Market
After an unexpected second-quarter dip, securities lawsuit filings shot back up in the third quarter. But the reversal, which could trigger more future directors and officers liability insurance payouts, had little pricing impact, experts say.

As Niches Disappear, E&S Execs Attack Cycle Challenges
With two cornerstones of their market's operational framework under attack—niche underwriting and wholesale distribution—excess and surplus lines brokers and insurers are finding it tougher just to stay even, let alone gain any ground, executives say. Even the promise of pricing stabilization that made a fleeting appearance at midyear had come and gone by the time of the annual meeting of the National Association of Professional Surplus Lines Offices, Ltd., according to the general opinions of E&S executives who spoke to NU's E&S/ Specialty Lines Extra at the October meeting and in the days leading up to the event.

EPLI Needed Now More Than Ever
When David Letterman recently revealed that he had engaged in sexual relations with members of his staff, it was at once funny—with his deadpan delivery—and yet disturbing to the viewing public. But the potential for liability arising from the event being played out on late night TV is just one reminder of the growing need for businesses to have employment practices liability coverage, according to Marla Donovan of Burn & Wilcox, who also describes how poor economic conditions and a changing political tide are creating new exposures.

Recession Creates EPLI Demand, Issues For Employers, Marsh Says
Demand has been rising for employment practices liability insurance protection as layoff activity has increased employee claims, an insurance brokerage expert said during a Webinar last month.

How To Achieve MGA Program Success: Retain Target Market Hometown Experts
Many insurance carriers are turning to a managing general agent as a way of hedging their risk-taking efforts on a particular product line in the most cost-effective manner during the soft market—and the most profitable carriers are cognizant of the distinct advantages of retaining the services of an MGA with hometown know-how, according to Michael D. Jaffe of National City Service Agency and Grace Meek of Delos Insurance Company.

Global Warming Coverage Required By Gassy Businesses, Legal Expert Warns
Businesses emitting greenhouse gases that cause global warming face imminent liability problems, and they should secure insurance coverage to protect themselves, a legal expert is warning. Insurance recovery attorney John G. Nevius of Anderson Kill & Olick noted that three recent federal court decisions during a seven-day period last month have split two-to-one over the viability of suits seeking damages arising out of greenhouse gas emissions and global warming impacts.

Shore Up Fiduciary Liability Insurance Policy Language, Broker Expert Advises
Volatile investment markets, the combined impact of recent court decisions and a host of legislative changes, as well as the realities of the current economy have produced an environment for class actions against benefit plan fiduciaries that some underwriters are describing as a perfect storm. In a time of increasing uncertainty, greater focus on the terms and conditions of fiduciary liability insurance policies is of paramount importance, according to Aon's Paul Slamar, who highlighted the "Investment Loss Coverage" endorsement as one important provision.

Will Fin'l Institution D&O Rates Stabilize?
Securities suits related to the Madoff Ponzi scheme and the credit crisis trailed off in third-quarter 2009, and while financial firms were still the leading type of company sued with one-third of the cases filed, the figure represented a steady decline from a level of 56 percent of suits in the first quarter, according to research firm Advisen. Separately, Advisen reported D&O insurance price increases for financial institutions averaged 30 percent, prompting NU to question whether lower suit percentages might mean financial firms could see insurance rates change direction in the near future.

Broker Q&A: Product Innovation Key For Crump
In the second of a three-part series of interviews with NAPSLO broker members focused on the market and other challenges set to be published in E&S/Specialty Lines Extra, John Jennings, president of Crump Property & Casualty Insurance, highlights innovative product development as the key strategy for the company in soft and hard markets.

Coming Up Next Month
NU's next E&S Extra e-newsletter, to be published on Dec. 28, will include more reports from the Professional Liability Underwriting Society's international conference and a review of some of the top stories featured in the newsletter over the past year.

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