Professional liability insurance is becoming more complicated, with the lines between different types of coverage starting to blur. This shift presents both opportunities and challenges for businesses. Jacqueline A. Waters, a managing director at Aon, highlights that the traditional way of thinking about insurance coverage is outdated.
Waters points out that in smaller and mid-sized markets, blending different types of insurance can be beneficial and cost-effective. As risks related to cyber incidents, technology, crime, and fidelity become more intertwined, many claims don’t fit neatly into one category. This can leave clients confused about which policy applies to their situation.
In London, the insurance market is leading this change, with new blended programs appearing, particularly in excess or umbrella layers. While large corporations often stick to traditional structures due to their specific needs, smaller firms may find more flexibility and advantages in combining coverages.
Public company directors and officers (D&O) insurance remains somewhat separate due to its unique nature. However, even in this area, there is potential to rethink how excess layers are structured.
Waters emphasizes that the confusion around coverage is not just a legal issue; it’s an organizational one. Miscommunication between legal, HR, and procurement teams can complicate claims handling. Many organizations struggle to understand complex policy language when claims arise, leading Aon to conduct detailed policy reviews. These reviews aim to ensure that all internal stakeholders understand the coverage and can communicate effectively, especially when a claim occurs.
The goal of these efforts is to provide clarity. Understanding the nuances of policies can prevent limits from being wasted or unused. Clients need to be aware of how to utilize their coverage, especially in situations with multiple claims where the order of claims matters.
Waters also addresses the current state of underwriting. She stresses the importance of showing underwriters why a client may be a better risk than the average. This differentiation is especially crucial for clients in industries or regions that are perceived as high-risk.
In summary, the landscape of professional liability insurance is evolving. As businesses face increasingly complex risks, understanding and leveraging the right coverage will be essential for effective risk management.