A Gap in the Professional Liability Insurance Marketplace?
Is “tailor-made” coverage for emerging industries the future of professional liability insurance? “Traditional professional liability” policies, which typically serve lawyers, accountants, architects, brokers and doctors, may no longer provide the precise fit for evolving professionals. “Whether their clients are consultants, nurse’s aides or chicken sexers, many producers have found a gap in the professional liability marketplace,” according to the Insurance Journal. Coverage has not always kept pace with occupational changes, leaving many professionals pushing for an insurance product that addresses the biggest industry-specific exposures. So-called “tailor-made” policies may fill this gap.
Tailor-made insurance products offer professionals specialized insurance coverage for specific risks stemming from the particular services they provide. These policies are designed to ease the difficult task of selecting insurance and to provide more streamlined products. Architects and engineers, health care professionals, and miscellaneous professional liability (MPL) are some areas where tailor-made coverage has been introduced. Professionals in these fields and others may face unpredictable risks and need coverage to address such exposures.
According to the Insurance Journal, the legal liability landscape also has shifted. Certain professionals historically have not faced the same level of claims activity as other lines. “But as these professions become more common and prominent, business owners are increasingly exposed to the possibility of legal action.” Since professionals are arguably held to a higher standard, there may be less hesitation and barriers to initiate suit. Even when those claims lack merit, defense costs and reputation risks are serious concerns for the professional. Professionals need appropriate insurance protection to cover these specific risks.
While tailor-made coverage is appropriate for many, some professional liability policies are limited by exclusions and require endorsements. This creates the opportunity for the professional and insurance producer to work together to locate more suitable insurance that fits their needs. Some carriers will package general liability, crime and privacy coverage, and cyber-exposure with customized professional liability policies, solving many coverage problems at one time.
Professionals with industry-specific exposures should be aware of tailor-made coverage. These products are an attempt by insurers to stay current with the changing professional workplace and to provide professionals with a menu of options to address specific risks.