Over the past several quarters, there has been a steady positive growth trend for Professional Liability Insurance. Sometimes referred to as professional indemnity insurance, but most commonly known as Errors & Omissions (E&O) insurance, this type of liability insurance helps protect individuals and companies who provide professional advice and/or a professional service. It helps to cover costs associated with defending against a negligence claim made by a client. Professional liability insurance is an absolute must for business owners that provide a professional service.
The demand for this type of insurance has spiked due to the increase in number of professionals in accounting, architecture, engineering, law, medicine, and other specialized fields. With so many business sectors experiencing growth in the current economy, the need for professional liability insurance is incredibly high—as is the need for insurance professionals who can advise their clients appropriately.
Along with the rising demand, there are areas for professional liability that have faced some potential issues. According to recent reports, two areas that have proven to be challenging to write are cannabis and cryptocurrency, as regulatory and legal obstacles make these classes somewhat difficult risks. Other areas that have posed some issues in terms of increased rates include healthcare, long-term care, or other aging-related services.
As for the exchange between professional service companies and their clients, there appears to be an interesting development regarding client views on the service provider’s experience and credentials.
"The relationship dynamic between professional service providers and their clients has been shifting, and it seems to have accelerated recently. In the past, it might have been professional but friendly. Now it's more of an arm's-length transaction, and you no longer have the same level of customer and client loyalties."
– Matt Probolus, Errors and Ommissions Portfolio Manager, Travelers
"The standard of care for professionals is very high,” he continues. “There’s no room for error, there’s no such thing as an honest mistake anymore, and our professional clients can’t rely on a handshake or a 15- to 20-year relationship. A professional-client relationship is only as strong as your most recent interaction.”
Tremendous overall growth in service professionals, coupled with highly specialized fields and a skeptical client base necessitate insurance agents remain on top of their game when advising in today’s professional liability marketplace.
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