Risk Update

Insurance Update (Part 1) — Premiums and Payouts Spiking in Response to Pandemic & More

Malpractice Insurance Bills To Climb Even Higher After Virus” —

  • “The BigLaw bill for legal malpractice insurance, already riding an upward trend in commercial coverage rates, is expected to head even higher amid an expected onslaught of pandemic-era disputes with attorneys.”
  • “If elite firms with solid claims histories ‘can demonstrate they’re still managing their risk really well, they will be able to get better terms than some others,’ said Ed Pickard of U.K.-based broker Miller Insurance, whose client list includes about 1,000 U.K. and international law firms. ‘But they’ll likely still see a 10-to-15% increase in premiums for the year, which we saw in April [policy] renewals and which we’re forecasting for October renewals as well,’ he said.”
  • “Eileen Garczynski, senior vice president at insurance broker Ames & Gough, said a significant bump in malpractice claims last year and more mega-payouts from insurers have already helped push up premiums for some large U.S. firms as much as 30%, representing millions of dollars in additional overhead this year.”
  • “Garczynski said an increasingly skittish insurance market has also forced some large firms to scramble to get hundreds of millions of dollars of coverage in place in ‘stacked’ policies that may include scores of underwriters that split up levels of policy coverage and risk… ‘Some insurers are saying they’re just not going to write large firms. It’s too risky, that they’re going to lose their entire $10 million or whatever it may be,’ Garczynski said.”
  • “An Ames & Gough survey of 10 legal malpractice insurers released this week found that seven had paid a claim of over $150 million in the last two years. Eight of 10 also reported that the overall number of claims filed in 2019 was the same or higher than the volume from 2018, marking a turnaround after a long period of relatively flat reported claims.”
  • “Earlier this month, broker and risk management biggie Marsh, a unit of Marsh & McLennan Companies, issued a report saying commercial insurance prices globally rose 14% on average in the first three months of the year compared with last year’s Q1.”