Despite growing hopes that professional liability pricing may finally stabilize, one specialist underwriter says the errors and omissions (E&O) market remains firmly in soft territory, with abundant capacity and aggressive competition continuing to pressure rates.
For Steve Adam, senior vice president of professional liability at Upland Specialty Insurance, the defining feature of the market in 2026 is not a sudden shift but the continuation of a trend that began after the pandemic.
"The biggest change I've seen over the past year is just the softness of the market," Adam said. "It's not even really a change. It's just been soft and softer as the years have progressed since COVID."
A growing number of carriers have entered the professional liability space over that period, increasing available capacity and intensifying price competition across many classes of business.
The broader financial and professional lines market has also remained under pressure. According to Marsh, US financial and professional lines insurance rates fell a further 2% in the first quarter of 2026, while D&O pricing ranged from flat to 5% lower as competition remained elevated.
Adam said the impact varies by occupation, but pricing pressure has become difficult to ignore in miscellaneous professional liability.
"We're seeing a lot of new entrants into the marketplace and a lot of new players, which has increased capacity over time," he said. "That's creating challenges in pricing because rates continue to be driven down."
Some niche classes remain more resilient than others. Adam pointed to collection agents as an area where underwriting opportunities still exist because of the complexity of the risks involved, alongside consultants, insurance agents, title agents and certain real estate-related businesses.
Although technology continues to reshape many professional services businesses, Adam said the principal causes of E&O claims remain largely unchanged. Breach of contract and professional mistakes continue to drive most losses.
Insurance agents, for example, can face litigation if they fail to recommend adequate limits or omit key coverage recommendations, while consultants often encounter claims stemming from missed contractual obligations or project deadlines.
Those traditional liability scenarios remain far more significant than emerging technology risk... for now. Artificial intelligence is attracting growing attention across commercial insurance, but Adam said it has yet to become a material source of claims within miscellaneous professional liability.
The wider market, however, is already beginning to price for the exposure. Amwins' 2026 State of the Market report noted that carriers have started introducing AI-related exclusionary language tied to risks such as algorithmic errors, data misuse and autonomous system failures, with related filings from several carriers and service providers expected to take effect in early 2026 — developments the wholesaler said are helping drive demand for specialized excess and surplus lines solutions.
Upland's policies remain silent on AI, neither expressly covering nor excluding it, even as some competitors move to carve the risk out. Adam said that approach reflects the absence of AI-driven claims in the book to date, but that any future incidents will be watched closely.
"Every claim that comes in gets reviewed carefully so we can understand what's causing it and whether there's a broader concern," he said. "At this point I don't have any concerns, but it's definitely on my radar."
While buyers continue to benefit from abundant competition, carriers face growing pressure to avoid sacrificing underwriting discipline simply to win business.
Rather than following competitors lower, Adam said his firm focuses on evaluating the underlying quality of each account before determining whether it can offer competitive pricing.
"We look at the class of business, the size of the company, and its loss history to determine whether it's a good risk," Adam said. "You also have underwriting standards and rating guidelines. You don't want to chase the market all the way down."
That discipline extends beyond reviewing application forms. Underwriters also examine client contracts, hold harmless provisions, employee training practices and operating history to better understand each insured's exposures.
"Our loss ratio is very low, and we're hopeful it stays that way," Adam said. "We have disciplined underwriters who do a good job maintaining the quality of the book, and our loss experience continues to look strong."
Despite periodic speculation that professional liability pricing may finally be approaching its floor, he believes the market has further to fall before meaningful stabilization occurs: "For the next six months, I expect pricing to remain soft. Hopefully, within a year, we'll start to see conditions improve."
