Today’s Market: Mid-Year Update 

In this report, you’ll find observations about the markets we serve, including the impact the coronavirus pandemic has had on our clients’ insurance programs, as well as on carriers, and forecasts and recommendations of what to expect in the near future.


Accountants Professional Liability Large Segment Group


At the end of the second quarter, which included a heavy renewal period, the Accountants Professional Liability (APL) market seemed to have settled into a steady 3-6% average primary layer rate increase. This figure applied to firms with attractive claims histories and acceptable self-insured retention (SIR) levels. Firms experiencing revenue growth saw premiums increase proportionately, with rates then being applied in addition to the growth in revenues. Those firms with higher revenue growth experienced rate changes in the lower end of the range. Depending how much the combination of rate and revenue increases drove premium levels, we also saw firms considering an increase in SIR amounts to offset any premium impact. Clients with claims exceeding their SIR by meaningful amounts saw greater rate changes, and more pressure to increase SIR levels, depending on claim severity and other underwriting factors.

Historically, when excess insurers price renewal layer terms, they follow the primary layer rate change, or even quote a lower rate change than the primary layer. This was the case for many years, including through most of the first half of 2021. Recently, however, excess carrier rates have begun to rise more than the primary layer of insurance. This is driven by changes in available capacity both in terms of certain existing insurers exiting the APL class, and others reducing expiring capacity. On the lower excess layers, where London markets especially play, we have seen a more aggressive stance on required rate need.

Renewal activity slows during the summer months, but gears up in the fall, at which time we may see further signs of market condition changes of note.

View a high-level look at rate changes during the past six months



Throughout the first half of 2021, the Aviation insurance market continued to experience the same upwards rating trend and hardening market environment as the previous 24 months. New losses continued to take place and older losses continued to develop. Premium increases have not yet achieved a level where the market is in a profitable position.

Aviation insurance carriers are still under internal economic pressures and remain unwavering in achieving underwriting profitability. As we cross the mid-point of 2021, we are seeing continued price escalations as an extension of 2020 pricing activity. Price increases and coverage reductions are affecting the entire aviation class of business.

While these changes may be more prominent in some coverage lines or sectors of the business (such as rotorcraft, aircraft original equipment manufacturers (OEMs) and critical parts suppliers), virtually all renewals are continuing to experience increased rates and premiums. The one bright spot we see in underwriting practices is that new business, either new to the market or new to a specific carrier, is starting to attract more favorable attention in terms of pricing. While this depends on the type of risk (e.g., new rotorcraft business is not desired by any carrier, but sub-component product manufacturers are looked at more favorably), it is a sign that underwriters are looking to expand their books of business while keeping profitability in mind.

Impact of the Pandemic

The impact of COVID-19 hit aviation hard. The easing of virus-related travel restrictions is slowly increasing public confidence in air travel, however, and airlines are increasing flight numbers to meet pent-up demand. This increase in flight volume also brings an increase in Aviation insurance premium, but there is a lot of catching up to be done. No claims for illness caused by the virus have been presented to Aviation insurers to-date, but insurers continue to increase pricing to regain lost premium.

Forecast & Recommendations

We have not seen much positive change in market conditions through the first half of 2021 and do not expect to see much for the balance of the year. The best we can hope for the balance of 2021 is market stability.

The best approach is to utilize strong relationships with underwriters, while emphasizing safety efforts employed, and approaching all renewals earlier than usual. The beneficial relationships the EPIC Aviation team has with underwriters helps minimize the levels at which pricing will increase.


Rates continued to increase, but at a more moderate pace than seen over the past two years. Workers’ compensation has been an outlier due to high employment rates, decent loss trends and reserve takedowns from prior years. Some of that has run its course and we began to see slight rate increases. There was some tempering of excess casualty rate increases following two years of aggressive market “corrections.” New market entrants may also have helped to blunt rate increases by bringing competition in the excess casualty market. Increasingly, umbrella markets focused on writing supported business to bolster their primary underwriting counterparts and offer more creative solutions.


Numerous litigation trends factored into impacting premium, capacity and rate. These included:

  • Anti-corporate juror sentiment
  • Social inflation
  • The “Reptile Theory”
  • Judicial hellholes
  • Nuclear verdicts
  • Litigation funding
  • Increasing anchoring of dollar values
  • Lack of tort reform

Without substantial tort reform, these trends are expected to continue unabated.

Excess casualty capacity decreased by more than half over the past two years, to approximately $1.4B. Actual capacity deployed was closer to $700M. Reductions were due to multiple factors, including: carrier consolidation, market withdrawals, rationalizing of capacity among major carriers (AIG/Lexington, AXA XL, Chubb) and underwriting restrictions.

Rates are not close to trend. In fact, it would appear that “today’s ceiling is tomorrow’s floor.”

Some examples below:

  • A claim that settled for $10M in 2000 would settle for $46.6M in 2020
  • The cost of a single fatality to disposition increased on average from $2M in 2012 to $5.1M in 2019
  • Large auto verdicts have increased by 300% over the past seven years
  • Over a period of five years (2010-2014) compared to (2015-2020), total paid claims increased 500%
  • Recent significant verdicts have become the benchmark for future claims


Throughout the balance of the year and beyond, we expect to see greater leveraging of data analytics to evaluate risk finance alternatives. In addition, continued underwriting scrutiny is expected to be placed on each risk, including questions about loss prevention measures and emerging operational risks. We also expect to see increased uncertainty surrounding civil unrest, global pandemic, wildfires and global warming. Exclusions and coverage restrictions are becoming more common – communicable disease, cannabis, full cyber, human trafficking and sexual misconduct liability. While it took more than ten years to get to this point, there is more work to be done to improve the results. The goal is to get to stability, not a hard or soft market.

There is good news within the Casualty marketplace. Additional capital of nearly $20B was raised, adding new capacity to the marketplace. Ark and Helix offer Bermuda capacity; Arcadian has offices in Bermuda and the U.K., Ascot offers U.S. wholesale only, while Convex, Inigo and Managing Agency Partners offer London capacity. Finally, Vantage is underwriting U.S. casualty risks out of Bermuda. An EPIC Casualty broker can provide more details.

There is a potential deceleration in rate increases for accounts that have seen corrections over the past several years, and the new virtual environment creates new opportunities to connect with markets.



The contingency market begun to show signs of recovery after 15 months of little to no activity during the COVID-19 pandemic. Contingency insurers were hit particularly hard by COVID-19 related losses and, as a result, the market has hardened with some key insurers withdrawing from the class of business. Capacity has been reduced significantly with rates increasing 50% and blanket exclusions now in force for communicable diseases and cyber. Insurers are moving capacity to preferred risks and more difficult placements cannot find fully supported terms despite significantly higher rates.

Impact of the Pandemic

Insurers continued to pay COVID-19 related claims. There are still deferred claims for several policies that have been extended, with rescheduled shows playing off in 2021 and 2022. The Contingency market has seen contraction as insurers withdraw their support; it will take time for new capital to move in and replenish the available market capacity. Policy language became narrower with exclusions for cyber and communicable disease. Insurers are increasingly looking to exclude wildfires in California – the result is less coverage at a significantly higher price compared to prior years.

Forecast & Recommendations

Towards the end of the second quarter, the Contingency market began to see increased activity, with artists and promoters looking for Event Cancellation and Non-Appearance coverage for the second half of 2021 and into 2022 for the U.S. market. Activity is still extremely limited outside of the U.S. Policy exclusions for COVID-19 and cyber are standard and there is increasing pressure to exclude brush fires in California. Larger outdoor risks, especially in Florida, are a challenge to insure.

Companies are advised to bind coverage quickly once satisfactory terms have been offered by insurers. They may attach strict deadlines for the client to bind or the insurer may withdraw support and move their capacity to a different risk.



Rates and retentions are increasing substantially, and even companies with strong controls and no claims are seeing substantial increases (50%+ rate increases and retentions). Capacity and competition are constricting. Markets have become more selective and are willing to walk away from risks. They are reluctant to compete depending on cybersecurity maturity. We have seen reductions in capacity, with carriers exiting the market and a resultant tightening of coverage.

Ransomware coinsurance/sub-limits became more common, and we saw increased waiting periods for business interruption. Biometric data exclusions were noted, and underwriting is becoming more comprehensive and sophisticated. There was an increased use and reliance on security scans, and the introduction of ransomware supplements. Subjectivities and non-renewals were based on underwriting.

The current risk environment includes big game hunting, double extortion and the privacy regulatory environment. Big game hunting is a shift to targeted attacks, and the demands are bigger and customized based on known financial information. Double extortion is the combination of ransomware and a data breach. Hackers spend more time inside the victim’s system before releasing malware. They exert pressure to pay ransom or suffer the consequence of the sale or auction of data. This is a very expensive attack. Privacy regulatory environment has seen more states join California in passing broad privacy regulations, to include biometrics.

In May, President Biden issued an executive order aimed at modernizing cybersecurity defenses by “protecting federal networks, improving information-sharing between the U.S. government and the private sector on cyber issues.” The White House issued cybersecurity best practices to include recommendations on backing up data, patching systems property, testing incident response plans and segmenting networks. 

Employee Benefits

Observations and Implications of COVID-19

As anticipated, the first half of 2021 has shown the reemergence of medical claims as life restarts. While the severe bounce some predicted has not materialized, claim costs are rising above normal medical inflation. Self-insured plan costs are being measured against prior years’ expected results and not against the depressed levels of 2020, so on a cash basis, there will be an increase in costs – around 10%.

The prospect of the next wave of COVID-19 is not as intimidating as employers deal with vaccine mandates and return to work. And increasingly, employers are willing to make vaccines a requirement.

Stop-loss coverage pricing continued to spike as large claims continued to emerge with significant outlier claims becoming more prevalent. Cell and gene therapies costing millions of dollars and cancer treatments contribute to conservation underwriting and increases in costs. Underwriters have not offered new laser options. Dental costs seem to be back, with normal dental trends expected to re-emerge in 2021. We expect an upward trend (4-6%) in dental increases.

Disability and life insurance experience is worsening, but rates continue to hold as underwriters attribute this to COVID-19.


Looking to 2022, market activity is expected to increase. Faced with low or no change to costs in 2021, many employers maintained their existing plans in 2021 and will look to restart cost management strategies. Chief financial officers are weighing in loudly on this need. The tightening labor market, however, is holding back change.



The Environmental/Pollution market began experiencing a firming trend in early to mid-2019, and that trend has continued into 2021. This hardening, however, has not been experienced to the same extent as in the traditional Property & Casualty/Excess markets.

Zurich’s exit from site-pollution (and secured creditor) in January 2021 somewhat defines the year, as this is the second major insurer to exit environmental business due to lack of profitability, following AIG’s similar decision five years earlier. While Zurich is a major insurer, their exit was not as profoundly impactful to the market as AIG’s February 2016 exit.

In addition to observing their major competitors exit site-pollution business, large losses from per- and polyfluoroalkyl substances (PFAS) and frequent mold claims continue to be cited by the remaining site-pollution insurers, adding credibility to their increasingly tightened approach to underwriting appetite and rating. Rate increases of 10% to 30% for site-pollution renewals have become more regular since the second quarter of 2020, particularly for large and complex risks. Risks with adverse loss experience or less-popular classes of business (e.g., mold/habitational, heavy industrial/chemical) are increasingly subject to re-underwriting at renewals. Some insurers have reduced available capacity (e.g., from $25M to $15M); however, overall capacity remains adequate for most insureds and there has been no trend of insurers forcing insureds to take increased retentions.

Blended General Liability-Pollution products, including companion Excess/Umbrella, have been experiencing rate increases and underwriting scrutiny like the standard General Liability marketplace. These products continue to focus on providing blended policy solutions primarily for select middle-market industries seeking low-to-medium deductibles (e.g., manufacturing, distribution, environmental consulting to name a few). The maximum available excess capacity for most of these insurers is $25M.

Finally, Contractor Pollution Liability (CPL) remains highly competitive and continues to be profitable business for insurers, with renewals showing only minor rate increases in most cases (i.e., up to 5%, if any). The number of insurers and overall capacity for CPL, whether written on a project-specific or all-services basis, remains robust.

Impact of the Pandemic

While many claims were tendered for COVID-19 and SARS-CoV-2 losses, claims development has not shown high exposure for Environmental insurers. Some key reasons for this include: 1) that business interruption coverages (on pollution policies) are often tied to the clean-up/remediation coverages, which were not (yet) triggered in most cases; and 2) disinfection cost coverage was not widely offered, and when these expenses were insured, were not catastrophic on a per-pollution incident basis. Despite this, the reaction from much of the marketplace has been to exclude infectious disease risks and/or only offer small supplemental sub-limits for disinfection costs moving forward.

Forecast & Recommendations

Underwriting discipline is currently more important to most insurers than expanding their market share. It is critical for insureds to help their broker engage the renewal process early, allowing additional time to negotiate or revise the marketing strategy where incumbent renewal terms received are unworkable. While there have not been substantial changes in Environmental coverage products available in the marketplace, underwriters may request more information than in prior renewals, and underwriting authority referrals may be more difficult and time consuming. Insureds unwilling to respond to information requests and/or underwriting questions in a timely manner are seeing coverage declinations or proposals with substantial limitations in coverage offerings.

Specific to PFAS, those insureds that can document their avoidance and management of PFAS exposure (ahead of their peers) have a much better chance of obtaining or maintaining this coverage in the current marketplace. Regardless, PFAS exclusions are increasingly likely on upcoming renewal quotes.

Executive Risk

Public and Private Company Directors & Officers Liability (D&O)

The D&O insurance market continues to be challenging for insurance buyers. Primary markets continue to seek rate increases between 20%-50%+ (sometimes higher, depending on the industry) for both public and private/non-profit companies. Depending on industry class, rates can exceed the above ranges (e.g., oil and gas, health care, cryptocurrency, cannabis, retail, travel and hospitality, higher education and manufacturing).

In addition to rate increases, markets are increasing retentions (sometimes doubling or tripling). Most markets are readjusting their risk appetites, which often results in limit reductions, and sometimes removal of entity coverage. We are seeing similar behavior by excess markets. Many excess players are imposing increases of 25%-75%. There is very little negotiation and carriers are still willing to walk away from deals.

Litigation funding allows litigants greater access to remedies for loss. This will cause increased claims, and larger settlement amounts.

The London market remains hard, with increases in both public and private D&O. Some new capacity is popping up (such as startups in Bermuda and London).

The market for Side A/Difference in Condition coverage is no longer soft. In June 2019, the Delaware Supreme Court issued a decision in Marchand v. Barnhill. The decision opened the door to derivative claims based on critical failures of board oversight. The plaintiffs’ bar has already begun to take advantage of the opportunity this precedent provides and is expected to continue to test the limits of the case throughout 2021. Markets are responding to this trend by increasing rates up to 30%, and some carriers are asserting minimum premiums. We have observed the effects of this legal development in the form of reduction in derivative investigation sublimits.

Enhanced underwriting continues. Markets continue to use COVID questionnaires and are focusing on overall crisis preparedness. In addition, we’re starting to see questions related to board- and executive-level diversity as well as diversity and inclusion programs and initiatives.

Environmental, Social and Governance (ESG) is becoming extremely important within corporations. Exxon recently lost board seats to an activist hedge fund in a landmark climate vote. This signals the rise of “social-good” activists.


The commercial Crime market continues to harden due to social engineering fraud and vendor fraud losses. Rates continued to rise between 5%-20%. The London market has not been a helpful alternative recently, as many carriers are no longer looking to take on crime risks, especially when there is foreign exposure to consider.

As in other lines, the underwriting process has gotten more vigorous. Details on current controls, any outstanding claims and supplemental fraud applications are commonplace. Underwriters expect detailed responses on all claims, as well as controls implemented to prevent future incidents.

There is heightened attention by underwriters to affirmatively address cyber-related exposures within the Crime policies. Cyber coverage restrictions are being added to commercial Crime policies to clarify and contain the coverage being provided.

Social engineering fraud capacity remains limited. Limits are being cut drastically, especially if an insured has had any type of claim. Markets are reluctant to offer social engineering limits to new clients, and hesitant to take on new business with any substantial amount of foreign crime exposure. Carriers are bracing for the effects of COVID on Crime claims brought on by lax controls due to remote working and a potential increase in embezzlement schemes due to the economic downturn.


The Fiduciary market saw firming, with routine increases between 15%-30%+, depending on the risk and size of the contribution plan. Most markets added mass/class action retentions and limited or reduced capacity. Retention size varies with plan size and loss history, but increasing retentions are becoming common. Carriers are pulling out of the market and decreasing limits.

Firming market conditions are driven largely by a growing number of excessive fee cases and the fear that these types of cases will ultimately impact smaller plans. It is becoming commonplace for carriers to require completed excessive fee questionnaires prior to releasing terms.

The more challenging classes of business were those with proprietary funds in their plans, and those with employee stock ownership plan (ESOP) exposure. This is no longer the case, as most classes of business face increased scrutiny.

Employment Practice Liability (EPL)

We continued to see markets reducing limits and increasing retentions. That said, some carriers have recently advised they are officially allowed to offer flat EPL renewals. In general, increases are still present, but the percentage increases have fallen significantly.

We are starting to see separate retentions for highly compensated employees and employees in certain high-risk industries or states, such as Healthcare, Finance, California, New York and New Jersey.

Most markets have significantly enhanced underwriting scrutiny regarding the overall impact of the pandemic and social movements: return-to-work protocols, planned approach to vaccine, expected reductions in workforce, equal pay programs, diversity and inclusion initiatives.

A recent Colorado law mandates disclosure of expected salary ranges by employers. Some states do not want to disclose this information and are looking for employees outside of Colorado.

Houston Methodist Hospital faced a lawsuit by employees who were forced to comply with a vaccine mandate. The suit was dismissed by a federal judge who agreed with the hospital’s position on mandating the vaccine.

Carriers are adding biometric privacy law violation exclusions and coverage restrictions around reduction in workforce.

Kidnap & Ransom

Markets sought relatively modest increases of between 5-10%+, and some markets looked to reduce limits.

The markets have made a definitive move to reduce exposure to cyber extortion within the Kidnap & Ransom policy. Most markets have significantly reduced or entirely removed limits associated with cyber extortion (ransomware).

Select markets are offering active assailant coverage via endorsement, including legal liability.

Forecast & Recommendations

Predictions – All Executive Risk Lines

  • The hard market will likely continue throughout 2021 and into 2022
  • We are closely watching the rapid increase in derivative litigation
  • Underwriters expect increased litigation due to bankruptcy/layoffs/insolvency after government money stops. Insureds should prepare for increased litigation by “Zombie companies” kept afloat by government funding and others who have been supported by these funds
  • Recent Volkswagen litigation included allegations that the Chief Executive Officer breached his duty of care. Cases such as this may lead to other large global awards (beyond U.S.) continuing to affect the global marketplace
  • Increased regulation will mean underwriters may now start to take risk management strategies into consideration, i.e., start to look for crisis management plans stemming from event driven litigation
  • D&Os should pay close attention to the duty of foreseeability. There’s a strong possibility they may start to be held accountable for adequately preparing for future events
  • Corporations may start to see more value in D&O insurance than they have in the past due to fall out from the pandemic
  • The focus on board and C-suite level diversity is creating increased liability and reputational exposure for public and private companies, with board diversity litigation, new diversity legislation and regulation increasing liability risk. Social pressure around diversity and inclusion increases reputational risk for companies
  • Significant and growing momentum around Environmental, Social and Corporate Governance (ESG) related activism will likely increase focus on how companies report and manage compliance, which will likely play into the underwriting process
  • New policies implemented by the Biden Administration could have an impact on various lines of executive risk lines of business going forward. We are specifically watching the proposed Pandemic Risk Insurance Act of 2020 (PRIA)
  • State legislative action and public sentiment continue toward increasing and expanded protections for employees will continue to impact Employment Practice Liability (EPL) insurance going forward. The gig economy and various lawsuits involving classifying workers as independent contractors instead of as employees is an upcoming issue to watch in EPL (especially in California)
  • Numerous companies are putting COVID-19 vaccination mandates in place, which could result in an increase in employment litigation
  • We may see movement in Congress or by the insurance industry to continue the Terrorism Risk Insurance Act that we see attached to most policies for the Coronavirus pandemic. This would be to ward off impacts of a future pandemic that would create a fund for impacted businesses the next time around
  • Crime rates may continue to rise if companies do not demonstrate appropriate controls

Hospital and Physician Professional Liability


The hard Medical Professional Liability (MPL) market remained in force for the first half of 2021, with hardening extended to other Property and Casualty lines such as Cyber and Directors & Officers coverage. While long-term financial and public health impact from COVID-19 remains uncertain, healthcare institutions, physicians and physician groups have seen significant fiscal and human resource stress. The combined impact of the virus, along with a hard market, put a significant strain on healthcare systems.

Continued pressure from Property and Casualty insurers to reverse significantly poor combined ratios is the primary reason driving continued pricing increases. In May, AM Best released a report noting the combined ratio for their composite MPL insurers deteriorated significantly over the last five years, resulting in an average of 112.5%. These high combined ratios, some as significant as 135%, are unsustainable for extended periods. Given the prior decade of soft market conditions, the inflation of loss cost, declining reserves and the prolonged low interest rate environment, carriers must either divest risk, raise premiums, reduce limits and/or restrict coverage grants or some combination of all.

As a result of the hardening market, health systems with favorable loss experiences continued to see 5-15% increases, whereas those with poor claims experiences have seen rate increases as high as 30%. These increases include excess layers. Physicians and physician groups are impacted less, however, carriers have been requesting and receiving approval from state-based regulatory agencies for increases between 3-15%. These increases do not always trickle down to individual physicians or groups, but carriers will continue to see an overall rate increase for all specialties combined.

On a positive note, the first six months of 2021 have shown no further carrier exits from the markets. In fact, two new carriers have entered the market: Bowhead Specialty and Vantage Insurance. While these two new carriers, along with recent market entries from CapSpecialty, Arcadian and BDA, have provided some relief, there remains an overall decrease in capacity.

Restricting Policy Language

With the mid-to-long-term goal of reducing exposure, carriers continued to restrict terms and conditions in policies. Areas of focus for these restrictions are sexual abuse and misconduct, COVID-19 and cyber. Although not new, restrictive opioid language persisted as well.

With respect to COVID-19, exclusions have not been consistent. Organizations with a long term/senior care delivery model often saw the introduction of such language. We’re finding that some carriers have inserted language making it more difficult, if not impossible, to batch COVID-19 claims together, which can have an impact on retentions/deductibles, attachment points and how much the primary layer will pay. To understand an organization’s COVID-19 exposure, underwriters are requesting information relating to vaccination distribution percentage, pandemic response, claims management procedures and COVID-19 exposures.

Continued Interest in Self-Insurance & Increasing Deductibles

Decreased capacity, a continued hard market and carriers’ continued efforts to restrict policy language have increased interest in self-insurance vehicles, such as captives and self-insured retentions. Those that already employ a self-insured vehicle are considering increasing their retention levels or have already done so to help them weather these difficult markets, while continuing to provide appropriate coverage. Clients are also exploring the opportunity to finance multiple lines of risk under one captive. For example, a professional/general liability captive might consider adding workers’ compensation and fleet exposures.

We also note that many organizations without a captive or a self-insured retention considered an increase in their deductibles, lessening the impact on increasing premiums.

Forecast & Recommendations

The MPL market is likely to face a difficult period through 2021; most carriers have significant capital to help overcome this challenging period.

While the renewal process is cyclical, it should begin once coverage is bound – especially in this market. A thorough review of policy language and prioritization of key language prior to the renewal is imperative. In addition, strong consideration should be given to review, analysis and discussion of retaining more risk in a self-insurance vehicle or increasing deductibles to mitigate some of the adverse terms brought on by the current market. Consideration should also be given to restructuring excess and surplus attachment points to advantage the total fiscal impact of premiums. Lastly, special attention should be given to cyber coverage. Healthcare remains a top target, especially in ransomware. Premiums have significantly increased, so a full market, policy language and limit assessment are imperative.

Lawyers Professional Liability (LPL)


In the Large Law Firm segment (200+ lawyers), a limited number of primary participants willing to compete for the lead position continued to stifle competition, however, rate increases started to shift from the double-digit increases firms experienced in 2020 (10% to 15% range) to single digits in 2021 (5% to 10% range). In the excess market, there continued to be a conservative deployment of excess capacity in this segment and incumbent excess insurers continued to push for rate increases matching the primary layer.

In the Mid-size Law Firm segment (50 to 199 lawyers), more insurers were willing to compete for business, which helped keep rate increases at more manageable levels (in the 2.5% to 7.5% range). In the excess market, incumbent insurers were more willing to accept lower rate increases than the primary in recognition of the abundant capacity in this space. We saw some newer entrants into the LPL marketplace offer competitive alternative primary and excess options for the mid-size law firm segment at rates below expiring.

There has been an increased focus from the underwriting community on deductible and self-insured retention adequacy which started in 2020 and has continued into 2021. Firms with adverse claims experience, or those which have grown substantially, will continue to see pressure to increase deductibles and self-insured retentions at renewal. Some firms will also look to increase deductibles as a cost-saving measure in the face of rate increases from the marketplace.

From a policy language perspective, domestic and international LPL insurers are starting to affirmatively address “silent cyber.” Several legacy carriers in this segment are leading this change and have added cyber-related questionnaires as part of the LPL underwriting process. Coverage for cyber exposures, within LPL policies, will be significantly reduced or eliminated. Firms will no longer be able to rely on LPL policies to protect against cyber-related risk.

Impact of the Pandemic

Most LPL insurers agree that there have not been many claims directly attributable to the pandemic and most law firms performed better than expected over the last 12 months. Scrutiny of economic conditions continued, as insurers are concerned that claim activity will increase rapidly if economic conditions worsen.

Forecast & Recommendations

While the overall LPL marketplace has become more consistent in 2021 and rate increases have lessened, firms still need to appropriately focus on their renewals by starting the process early and providing a detailed submission to the marketplace. Despite few direct pandemic-related losses in the LPL space, firms should be ready to address underwriting questions regarding plans moving forward for work arrangements (i.e., back in the office full time, fully remote or hybrid) and how they’ll manage associated risks with the new arrangements. Underwriters may also ask firms how the new work environment will impact their real estate footprint and growth initiatives.



Over the past three months, available capacity has remained relatively the same. Several markets have begun to redirect their focus from re-evaluating underwriting strategy and current portfolios to seeking new business opportunities and growth. Although markets are becoming more aggressive, they continue to maintain underwriting discipline with risk selection and profitability as a priority.

Marine cargo and Stock Throughput (STP) programs with higher limits continue to require participation from a few markets and to be written on a quota-share basis. Capacity offered for STP programs is driven by national catastrophe limits for stock/storage locations.

The excess Marine liabilities/Bumbershoot market continues to have a limited number of participants and available capacity for the $4M excess $1M layer. As a result, rates continue to increase at above average levels compared to other marine lines.

Underwriting guidelines and business plans continue to push for rate. However, the percentage increase has eased over the past few months. With new capacity and underwriting operations entering the London market, competition for quality/profitable business will likely increase in the coming months. Market conditions remained generally “as before” with underwriters looking for overall general market increases in the high single digits with more significant double digit increases for excess placements.

Personal Insurance/Private Client


The market conditions in the Personal Insurance/Private Client area remained largely unchanged during the first half of 2021.

Personal auto remained the profitability darling of the Personal insurance space, so pricing remained stable. A mixed bag of conditions is offsetting pricing. The lack of new cars in the marketplace, combined with the still-lower-than-normal mileage due to the pandemic, resulted in a suppressed rate environment. This was offset by the increased cost and reliance of technology in newer vehicles and the likely demand surge that will occur as we begin to return to normal in terms of driving habits. Many carriers have passed on their normal rate filings and/or are passing on very modest increases.

The Property market remained highly unstable and the recent loss trends have conspired to create an extreme response in the most impacted areas. Looking back, over $1B of weather-related losses were reported in 2020. A total of 30 named storms, including 12 that made landfall, occurred during hurricane season. Five of the top six wildfires in the west occurred in 2020. In both cases, the 2021 projections are not promising, with a higher-than-average hurricane season forecast and the drought conditions in the west in advance of fire season. Water damage claims, primarily due to plumbing system failures, also continue to bedevil the industry; we’re seeing carriers get much more aggressive in non-renewal and new business underwriting in this area.

The Property market in impacted wildfire areas of California is unlike anything we’ve seen. Carriers are attempting to non-renew the most exposed properties in their books and the result for impacted homeowners is cataclysmic. In an extreme instance, 25 markets were approached without a single offer before settling on a combo California Fair Access to Insurance Requirements (FAIR) Plan/wraparound provided a partial solution. In another instance, we were presented with a new business opportunity on a large home after a client in Pacific Palisades received a quote in excess of $1M for homeowner protection. We’d like to say there are solutions on the horizon, but they have yet to develop. The head scratcher is that State Farm and Farmers continue to be relatively aggressive in the middle market space while the rest of the industry retreats. With these exceptions, the Property market is sideways, and our teams are challenged to find any protection in some situations, let alone acceptable alternatives.

The eastern and gulf seaboards continue to face a challenging environment for new business although there are higher premium/limited coverage options available to impacted homeowners. In addition, material costs and the skilled labor shortage continue to be part of the story in personal property across the country. This adds up to high single digit/lower double digit average rate increases throughout the country, with some individual clients substantially higher.



We are now in our third year of a hardening Property market and are beginning to see signs of moderation. The 20% + rate increases that loss-free accounts were seeing at 2019 and 2020 renewals are now a thing of the past, as 2021 renewals are put in place.

As underwriters added rate over the last two renewal cycles, many achieved their goals of implementing “technical pricing” and most have now “balanced their books.” We still see some underwriters trying to implement double-digit rate increases, but there are now enough players offering low-to-medium single-digit rate increases to offset, or replace, higher priced capacity. We recently saw several flat-rate renewal offerings when circumstances aligned to make that possible.

On large shared and layered deals, we noted an overall composite program rate decrease was achieved if restructuring allowed lower priced capacity to take the place of higher.

Accounts with continued losses over the past year, and/or material catastrophe exposures from wind, earthquake, flood, or wildfire, continued to be the more challenging renewals, but they’re in a more favorable position than in the past two years.

Terms and conditions still faced scrutiny, as underwriters continued to work toward eliminating attritional losses. What may have been forced restrictions to terms and conditions over the past renewals can now be used, if appropriate, as negotiating tools to achieve pricing credit.

Impact of the Pandemic

Property carriers across the board have been tightening up exclusionary wording for infectious disease. Those few carriers that continued to offer explicit coverage either tightened the coverage offering and/or lowered the applicable limit to a nominal amount; the idea being to affirmatively offer defined coverage at a low limit, rather than leaving policy interpretation and payable limit in the hands of politicians and judges.

The biggest impact the pandemic has had on the property market has been the suspension of loss control engineering visits by insurers and third-party firms. This interruption of the regular cadence of risk control surveys put to question the ongoing maintenance and progress of compliance with previously made recommendations at many large locations. In some cases, this lack of visibility impacted underwriters’ abilities to offer full capacity at renewal or to quote on new business.

As travel restrictions have begun to ease and field engineers are again starting to tackle the backlog of site inspections, we’re seeing this crucial data begin to be updated, and the process start a return to normalcy.

Forecast & Recommendations

We continue to see pockets of new capacity enter the market, which we expect to have a favorable impact on the trend toward rate moderation. The more aggressive capacity can only help to increase the supply to meet demand.

We are now in the 2021 Atlantic Hurricane season, which has been predicted to be another above average year for both the number of named storms and those that make landfall. If we are as lucky as we mostly were in 2020, with no direct hits to major metropolitan areas, we expect the slowing of the hardening market to continue and move to flat, and in some cases, lower rates. If we sustain a direct hit or two, the market will be tested to see if the “corrections” incumbent underwriters made over the last two years were sufficient. We’ll also see a testing of the sustainability of the new capacity that has entered the market.

It’s imperative to have and present thorough, quality underwriting information.

  • Be early in the process, as underwriters are buried with new business opportunities as everyone goes to market looking for a better deal
  • Differentiate your risk from the others so yours goes to the top of the pile
  • Be model friendly so underwriters can upload data into the models quickly
  • Be able to backup the validity of your reported property and business interruption values
  • Consider alternative retentions and limits
  • Challenge existing program structures



The pandemic did not have as large of an impact on the construction industry as originally believed; most construction workers were deemed essential and most public works projects continued unabated. Private works construction did suffer with cancellations of office-related projects and some urban residential projects, although many of them have come back online.

Tech, biotech, healthcare and renewables continue to drive the industry. Manufacturing and transportation are quieter than in the past but are still around. Commercial tenant improvement/new office and urban residential projects probably got hit the hardest. Well capitalized contractors (large and small) with sound business plans continued to do well by staying disciplined with overhead and focusing on maintaining profitable backlog.

We observed many contractor clients recording record revenue and profitability years in 2020. The Paycheck Protection Program (PPP) loans were very effective for best-in-class contractors to maintain business plans. Forgiveness rates for PPP loans are at or near 100%, which has resulted in an increase in liquidity, retained earnings and overall profitability. Contractors with marginal business plans and questionable backlogs were given a reprieve with PPP loans but their problems resurfaced as soon as they used up the funds. Despite high PPP loan forgiveness rates, PPP loans did not convert marginal or poorly performing contractors into good contractors.

Major trends currently affecting the construction industry and driving the contract Surety results include:

  • Supply chain volatility: The pandemic caused a host of delays in commodity material manufacturers, mostly caused by factory shutdowns both here and abroad. Everything from fuel to lumber to plastics to metals has suffered from some sort of shortage, panic buying and price gouging. On top of the legitimate shutdowns, there are many stories of manufacturers with ample supplies that faked shortages to raise prices. The shortages seem to have quieted down in the last 30 days, but they have caused many jobs to get delayed.  See more detail below in Job Stoppages
  • Qualified labor volatility: Qualified labor is an ongoing issue for the construction industry. Most contractors cannot find the necessary skilled and unskilled labor needed to properly execute their business plans. A big factor driving this is pandemic unemployment payouts, which make it more advantageous for workers to stay home and collect large unemployment checks rather than go back to work. Pandemic unemployment checks are supposed to stop on September 1, 2021. It will be interesting to see if this helps the labor issue
  • Job stoppages/delays/cancellations: The combination of supply-related issues plus pandemic stoppages has resulted in a heavy analysis of force majeure clauses in construction contracts. Most owners are willing to give contractors extra time due to delays, but extra funds are much harder to negotiate. The medium-to-long-term impact of contractors potentially absorbing the costs of delays without getting compensation is on the minds of the Surety underwriting community, as a trend that may have a quiet and significant impact on job margin
  • Continued “cannibalistic” behavior amongst competition: The medium-to-high level of volatility in the industry is causing contractors to “chase work” just to secure backlog for the short and medium term. In some cases, this means that contractors are willing to bid work at less-than-reasonable profit margins which is harmful over the short, medium and long terms. There is also evidence of contractors bidding jobs at a loss just to keep their labor resources working, which is also alarming behavior

Reckless or impulsive decision making by contractors during a period of volatility will reverberate negatively into contract surety results because the contractor’s ability to qualify for future surety credit decreases when job margins and profitability decrease. Disciplined contractors with experienced decision makers will navigate the current term successfully because work continues to be available.

Surety loss ratios and contractor insolvency have been relatively and surprisingly low given industry volatility. There have been some large losses from a severity standpoint, and we’ve observed that frequency has been low. Surety underwriters are cautious about loss frequency increasing due to factors above and this will provide some new business opportunity for best in class.

Technology & Life Science – Middle Market


During the second quarter, the Middle Market Technology and Life Science Property & Casualty market, which was already beginning to harden pre-coronavirus, continued to harden, with Cyber and Errors & Omissions (E&O), Directors & Officers (D&O), and Employment Practices liability lines seeing the most significant rate, terms and limit hardening. E&O and Cyber rates skyrocketed, while limit offerings were reduced and retentions increased dramatically.

Healthcare IT and financial technology-related companies saw the toughest renewals, largely due to the high profile and high number of ransomware attacks over the past year. Due to higher prices and lower capacity, D&O buyers are evaluating lower ABC towers, and replacing higher limits with Side A. Tech and life science underwriters were cautious on renewals and, in many cases, increased retentions and significantly cut back on capacity, while applying rate increases. We are starting to see new Tech and Life Science underwriting specialty units emerge from insurance carriers that may not have focused on the space traditionally, but the new entrants have been cautious. We continue to watch these entrants, evaluating policy language, appetite, capacity and pricing, and what impact it may have on the market.

Forecast & Recommendations

It is critical that Tech and Life Science insureds and brokers allow plenty of time to negotiate coverage offerings with underwriters. Underwriter calls with insureds and complete and accurate submissions have proven necessary and productive when securing renewal options. For those insureds that cannot answer questions to the underwriters’ liking, or if the underwriter feels the entire story has not been told, the insurers are seeing proposals with significantly higher retentions, limitations of coverage and, in some cases, no proposal at all. The partnership between broker and insured has always been important, and even more so for the tech and life science sector in this hard market. It is essential to get out to market early.


Rate Change Table

Line of CoverageRate Change
+40% to +100% (+100% for high-risk operations)
Light Aircraft
+15% to +30%
Corporate Aircraft
+20% to +50%
Fixed Base Operators
+30% to +40%
Component Product Manufacturers
+20% to +35%
Aircraft Manufacturers
+50% or more
*All based on no loss history past 10 years
Auto Liability
+10% to +35% or more for higher hazard risks
General Liability
+10% to +15%
Workers’ Compensation
+3% to +7% or more with adverse loss experience
International Casualty
+5% to +10%
Umbrella Liability
+30% or more for higher hazard risks
Excess Liability+75% to +150% or more for higher hazard risks
Cyber+40% to +80%
Employee Benefits
Insured Medical Renewals+10% to +20%
Self-Insured Medical Renewals0% to +5%
Medical Stop-Loss Renewals+20% to +30%
Dental+2% to +6%
Primary Lines
Loss-free accounts0% to 5%
Moderate risks5% to 15%
High risks – larger projects15% to 25%
Management liability30% to 50%
Contingency rates3% to 5% on limit
Errors & omissions (E&O)/Professional lines0% to 5%
Workers’ compensation Adding scheduled modifications 5% to 10%
Excess/Umbrella Lines5% to 15%

No Losses and Low or Medium-Risk Industry (class-A office; warehouse risks); most CPL business +0% to +5%
Moderate-Risk Class or Complex Risk (mold/habitational; large portfolios; tougher CPL risks) +5% to +15%
Any risk with adverse loss experience (frequency or severity) and/or High-Risk Classes (heavy industrial; chemicals/fuels; rail exposures; per- and polyfluoroalkyl substances (PFAS) or other emerging risk exposure)+20% to +40%
Executive Risk
Commercial Crime+5% to +20%
Directors & Officers Liability*

Private Company

+20% to +50%

Public Company

+20% to +50%
Employment Practices Liability+5% to 20%
Fiduciary Liability+15% to +30%
Kidnap & Ransom+5% to +10%
Cargo including stock throughput (STP)+5% to +20%
Excess stock/warehouse
+15% to +25% (when capacity is available)
Hull+5% to +10%
Primary protection and indemnity (P&I) +10% to +15%
Primary marine general liability (MGL) +5% to +15%
Excess Liabilities:

Excess of $1 million

+20% to +25% (very limited capacity)

Excess of $5 million

+10% to +15%
Medical Professional Liability +10% to +15% for clean risks in desirable jurisdictions
+20% to +35%+ for loss impacted and difficult jurisdictions
Personal Lines
AutoFlat to +2% with many carriers reporting record profits
Homeowners*+7% to +10% on average with specific exposures, such as course of construction (COC) and areas (wildfire and hurricane) significantly higher should a homeowner be in the open market
Professional Liability
Accountants Professional Liability
+2% to +25% depending on claims, revenue/ growth and firm size
Large Law Firm Segment+5% to +10%
Mid-size Law Firm Segment+2.5% to +7.5%
PropertyFlat to +10% no losses; not catastrophic (CAT)-exposed
+5% to +15% CAT-exposed
+15% to +40% losses; CAT-exposed
Surety (Construction and Commercial)Flat
Technology & Life Science – Mid Market
Tech E&O/Cyber+25% to +50% clean, no losses
Life Science Product Liability+50% to +100% risk with losses or without proper controls in place (no multi-factor authentication (MFA) or event data recorder (EDR)). Healthcare IT and FinTech very challenging renewals
D&O and Employment Practices Liability Insurance (EPLI)Renewal rates flat to +5%
+10% to +50% (clean, good financials, private company)
20% to +50% (clean, public company), with higher retentions

Important disclaimer: the ranges above are macro observations only. Every risk is comprised of its own characteristics (such as industry, loss history, geography, etc.) that may impact renewal pricing.