Across industries, companies face the risk of professional errors leading to serious losses and costly lawsuits. To learn more about the types of Professional Liability Insurance available to address these risks, we spoke with Andy Wood, Vice President, Professional Liability, Burns & Wilcox, Chicago, Illinois.
What are some of the greatest risks today when it comes to Professional Liability?
A.W.: Business owners should be more concerned about cyberattacks. It is the only area where the peril changes every single day. You must be constantly vigilant to protect yourself. A cyberattack can wipe out all your data, stop you from using your systems, expose your clients’ and employees’ confidential information and more. If your company does not have sufficient safeguards and insurance coverage in place, a single breach could put you out of business.
What should business owners be aware of relative to this risk?
A.W.: Despite consistently being in news headlines, so many companies – especially small businesses – are not adequately insured against cyberattacks. There is a tendency to forgo Cyber coverage, or business owners incorrectly think their company is protected through another insurance policy. Typically, Cyber-related endorsements on other policies do not provide the breadth of coverage or the risk mitigation services that come with a Cyber & Privacy Liability Insurance policy.
What are some of the other risks professionals may face and which insurance policies can help them respond to these threats?
A.W.: Errors & Omissions (E&O) Insurance is important for insuring professionals such as accountants, lawyers, tax preparers, architects and engineers, and trade contractors. It also extends to healthcare for long-term care, occupational therapists and all points in between. Management Liability policies like Employment Practices Liability (EPL) Insurance and Directors & Officers (D&O) Insurance are also important.
Every one of those market segments has challenges and opportunities, but healthcare is perhaps the most dynamic and challenging segment beyond cybersecurity from an insurance coverage pricing perspective right now. From long-term care facilities to the medispas that are getting into IV therapy and semaglutide injections for weight loss, there is a possibility of physical harm to a patient. When there are losses, they tend to be very large losses.
Has there been any lasting impact of the COVID-19 pandemic on the Professional Liability Insurance market?
A.W.: When you look back at the early days of COVID-19, there was this massive physical shift of individuals from in-office to remote, and, as a result, the same controls were not in place for system access. This caused a massive increase in cyber incidents, which then dramatically drove up the pricing for Cyber & Privacy Liability Insurance. It also simultaneously stimulated the development of stronger security services, and as a result, pricing has been coming down for the last 18 months or so and there has been dramatic improvement in the quality of services businesses have to protect themselves. In the healthcare market, coverage for home healthcare became almost unattainable, but that has now improved, as well.
What steps should businesses take to complement their insurance coverage from a prevention standpoint?
A.W.: If you are a business providing professional services, you must look at the scope of all your insurance needs and then really listen to your insurance professional. Discuss things such as:
- What are the existential threats to your business?
- What things could detract from your time delivering those professional services?
From the perspective of E&O Insurance, if you get sued, you have to invest a lot of time and mental energy to address that lawsuit. You want to make sure you have an insurance carrier that will have your back and act in your best interests handling that claim.
What are the greatest opportunities for brokers to get into Professional Liability Insurance?
A.W.: Professional Liability Insurance is a particularly dynamic segment of the market. With Cyber & Privacy Liability Insurance, for example, you have a threat that is changing every single day, and we have more markets coming into the space regularly and the services they are offering are changing dramatically. With Professional Liability Insurance, you have to become an expert in multiple products and that is an exciting challenge for anybody looking to get into that space. You get to deal in every single business segment.
What advice would you give brokers to increase their success rates with these products?
A.W.: To be successful as a broker, you really should be looking at professional designations from the Professional Liability Underwriting Society (PLUS), including Cyber designations. Brokers should also read and stay current on the issues and trends, and then perhaps start to pick some industry types to focus on and become an expert in that market segment.
What questions should brokers and agents be asking clients relative to these products?
A.W.: What are the fundamental threats a company faces in conducting business effectively, and is the business insured against those? Is the business owner and the board, if they have a board or other leadership, adequately protected against lawsuits that might come their way? Does the business owner have Professional Liability Insurance with a company that they know will be there to handle a claim if and when a claim happens, and do they have the confidence in them to handle those claims?
Professional Liability Insurance
Why your clients might need it: Any business that sells expertise, knowledge or skills may be at risk in the case of claims of negligence, errors or omissions.
Protects against: Protects against liabilities like cyberattacks, accounting or architectural errors, a multitude of workplace-related liabilities and other threats to businesses, organizations and countless professions.
Expert Opinion: “If your company does not have sufficient safeguards and insurance coverage in place, a single breach could put you out of business.”
