Trends to watch out for in professional liability insurance

Trends to watch out for in professional liability insurance | Insurance Business Canada

Trends to watch out for in professional liability insurance

With the goal of becoming one of the leading MGAs in Canada, Trinity Underwriting aims to uphold the principles of trust and integrity as the most important aspects of its relationship with clients. Due to its focus on delivering reliable products and services that have long-term benefits, the company recently won a 5-Star Professional Liability award from Insurance Business.

In this interview, Trinity Underwriting’s president, Michael McLachlan, told IB about the trends in this business segment and his company’s strategies to assist its PL clients.

Despite the uncertainty that caused small businesses and management consultants to forecast reduced revenue in 2020, McLachlan said that these clients “didn’t suffer that badly and the economy kept going – I think a lot stronger in the professional areas than people thought it would. So, there were obviously other industries, for example, the hospitality industry that was severely affected, but professional lines, not so much.”

Regarding strategies that could be used to improve underwriting services, McLachlan said that risk management services and recommendations were part of the value proposition for those who are buying PL insurance.

“There’s usually some kind of certification and there might be continuing education requirements,” he said. “Usually, the insurer will work with the association to provide those risk management tools for smaller individual companies buying insurance not as part of an association.”

He said that an affordable and effective risk management tool is the application form that brokers and clients have to fill in, because the questions on the form are meant to gather relevant information about risk exposure.

At present, among the challenges that the industry should be paying attention to are the increasing client expectations due to higher standards of professionalism.

“Service standards, expectations of service standards have gone up. What you get in the industry is probably fewer claims, so you probably get a reduced frequency of losses. But when you do get a loss, quite often it’s larger. … At this moment, it’s kind of a continuous process,” said McLachlan.

He also sees changes in peripheral areas, such as cyber, which is more of a first-party coverage than professional liability. For example, if a company experiences a ransomware attack, the technology firm responsible for its cybersecurity is likely to face a greater legal liability exposure, which is normally covered under their professional license policy.

Environmental, social and governance issues represent another important area to keep an eye on. “Companies need to be more concerned about caring for the environment and caring about social trends such as diversity ... And yes, I think we will start to see an increasing number of claims in those areas and, you know, environmental impairment liability historically being very profitable in Canada, pollution liability. But I think you’re going to see more and more responsibility thrust on companies that are in fact polluting the environment. And I would expect losses in those areas would increase in the future,” he said.

Watch the full interview here