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Professional risks
Three leading insurance experts provide valuable advice on how to handle the increasing risk of litigation, rate increases, and the damaging effects of COVID
Richard Bryant
Prime Insurance Company
Industry experts
Dan Mogelnicki
Tokio Marine HCC – Cyber & Professional Lines Group
Emily Loupee
Gallagher
Trevor Baldwin
Baldwin Risk Partners
Richard Bryant is a senior underwriter at Prime Insurance Company. He started his career at a Lloyds syndicate in 1985. Most recently he was head of specialty at Ark Syndicate, writing and controlling a book of $100m that included product recall, contingency and a broad range of professional classes. Bryant joined Prime in May 2021. It was Prime’s expertise and iron will in dealing with claims that was his overwhelming rationale for joining the company, to which he brought his underwriting expertise and leadership experience.
Prime Insurance Company
Richard Bryant
Dan Mogelnicki is a senior vice president of professional lines in the Cyber & Professional Lines Group at Tokio Marine HCC. He has been a principal and division president and underwriting manager of a national MGA and has supervised underwriting at a prominent property/casualty carrier.
Tokio Marine HCC – Cyber & Professional Lines Group
Dan Mogelnicki
Emily Loupee has been a leader in Gallagher’s management liability practice for more than 12 years. As area senior vice president, she is responsible for servicing existing accounts, developing new business accounts, and supervising account managers and account assistants. Loupee oversees the negotiation, brokerage and placement of all aspects of management liability programs in all industries, including publicly traded, privately held and not-for-profit entities. She is the co-national director for management liability in the Real Estate Practice Group and the national subject matter expert for EPL for Gallagher in the US.
Gallagher
Emily Loupee
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Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Baldwin Risk Partners
Trevor Baldwin
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Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Vault Plus Mortgage and Finance Consultancy
David Merison
“With the tidal wave of claims that may come to fruition, the underwriters have to maintain discipline, and also the reinsurers who provide support to the direct writers so that underwriting discipline is maintained through those channels as well”
Richard Bryant,
Prime Insurance Company
THE PROFESSIONAL RISKS landscape has been a tumultuous one over the last 12 months, hit by a double whammy of COVID-19 and a rapidly hardening market. However, where does it sit as we embark on a new year – and do the opportunities in the sector actually outweigh the challenges?
In the first in IB’s series of Executive Insights for 2022, a panel of experts working across the professional risks space delved into some of the landscape’s hottest issues and delivered some ‘can’t miss’ tips for those operating in the area.
A hard market under COVID
As Dan Mogelnicki, senior vice president of underwriting professional lines at Tokio Marine HCC – Cyber & Professional Lines Group, explained, 2021 saw significant market correction due to the spin-off effects of a prolonged pandemic coupled with the continuing low interest rates and macroeconomic factors at play.
“More specialized, consultative brokers are going to have more new business opportunities than the average firm that’s doing business like they were 30 years ago”
Gerard Vecchio, MarshBerry
“The [COVID-induced] changes have also caused furloughs and other disruptions which can lead to increased incidence of EPL litigation as employees seek to recoup lost income or deal with situations they don’t think are fair, like vaccine mandates”
Emily Loupee,
Gallagher
“The [COVID-induced] changes have also caused furloughs and other disruptions which can lead to increased incidence of EPL litigation as employees seek to recoup lost income or deal with situations they don’t think are fair, like vaccine mandates or the safety of the workplace environment.”
Other broader economic factors weigh into the equation, according to Loupee, including the increased cost of goods, as well as shipping delays.
Richard Bryant, senior underwriter at Prime Insurance Company, offered his perspective.
“EPL claims are only going to rise,” he said. “It's a rocky road for this class of business, and COVID is just going to add to these challenges.”
“I think you would be best served by making sure you do an analysis of those markets that best suit your needs and focusing on making more solid relationships with the markets that you think are of value to you”
Dan Mogelnicki,
Tokio Marine HCC – Cyber & Professional Lines Group
“Any time there is disruption in industries there is increased risk of litigation. The bulk of the [4,000 COVID-related EPL cases] is in California, which is known as the highest-risk state in the US for employment practices liability,” Loupee said.
“There is so much uncertainty surrounding evolving requirements issued by the government for workplace safety and vaccine mandates."
All the panelists agreed that, when it comes to employment practices litigation, sexual harassment and discrimination top the list.
“We have seen the biggest increase in the size of claims for sexual harassment for EPL, more so than any other line of business that we write, representing a tripling of the size of our average claims,” Mogelnicki said.
Tips and advice for navigating a complex environment
Given the internal and external pressures in the insurance space, the logical question to ask would be, what can be done to mitigate the fallout?
Loupee’s advice was “to focus on data-driven education and communication.”
“We really want to educate our clients as to what we are seeing in the marketplace, by focusing on detailed data and analytics and claims data trends so clients really understand what is going on and are partnering with us in the process,” she said.
For Bryant the key is “discipline on pricing.”
“I think that with the tidal wave of claims that may come to fruition … the underwriters have to maintain discipline, and also the reinsurers who provide support to the direct writers so that underwriting discipline is maintained through those channels as well,” he said.
2015
2016
2017
2018
2019
12%
10%
8%
6%
4%
2%
0%
1.7%
3.8%
7.0
All ADIs
Major Banks
Mutual Banks
Trends increasing EPLI claims
7.5%
6.7%
11.3%
5.3%
4.9%
3.8%
3.0%
3.6%
3.6%
8%
7.3%
“Carriers still need to get an acceptable rate on capital,” Mogelnicki said.
“In this low interest rate environment, the way to obtain that is to concentrate on underwriting, including increasing rates. Carriers are taking selective corrective action either on entire segments or taking more of a surgical approach.
“Frequently, [carriers] are taking rate coverage, action, and classes within a line of business, and we are seeing on the EPL side a strong rate increase on renewals.”
Mogelnicki also pointed out that insurance professionals have seen a reduction in limits on capacity for some insurance lines. He specifically highlighted that construction contractors are increasingly turning toward professional liability as more claims are made against design builds not covered under general liability.
He also cited the impetus of the MeToo movement, which has led to an increase in sexual harassment claims as well as the “law firms that love to get these cases as they see dollar signs.”
New industry trend
Beyond the rise in the number, type, and size of claims and resulting litigation in the insurance space, the panelists pointed to another closely related trend in the market.
Both Bryant and Loupee highlighted the concept of a trend towards ‘social inflation.’
COVID-19's impact on EPLI claims
CUA
Billion
12%
$17.44
Billion
$10.83
1%
Billion
$10.09
6%
Newcastle Permanent
Heritage Bank
Billion
$8.81
5%
People's Choice
Billion
$8.04
Teachers Mutual
14%
Emily Loupee, area senior vice president in Gallagher’s management liability practice, provided her own insight, adding that she tended to examine the parameters of a hard market from “an exposure standpoint.”
“We have to look at what causes those increases [in claims]. With employment practices liability, COVID-related changes have caused layoffs, and they have caused increased scrutiny of workplace conditions,” Loupee said.
Litigation and COVID
All the panel experts agreed that, with an increase in claims during the pandemic, the threat of large lawsuits looms large over the insurance industry.
“There are 4,000 cases that are being taken to either court, or as claims, and this number will rise,” Bryant said.
Mogelnicki added, “We have seen certain classes suffer under COVID by just going out of business, mostly in areas with literal hands-on exposure, such as home healthcare."
Other industries were hard hit as well. Airlines, restaurants, movie theaters, and retail were forced to shut their doors, sometimes permanently.
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“It's a concept that is described as a change in the overall sentiment of the public and plaintiffs’ attorneys and judges, due to social movements and to the pandemic that has caused the cost of all lawsuits to increase,” Loupee said.
“Any given lawsuit is more expensive because of the public sentiment and the judges and juries which make the punishments so much larger and socially acceptable now."
Agreeing, Bryant added that “this is a trend running through the industry, and the problem lies within the insurance companies that continue to pay claims because it is often cheaper to pay that claim than it is to defend the insured.”
Mogelnicki suggested that the core of the insurance model should always be based on the relationships between the insureds, brokers, underwriters, and reinsurers.
“Ours is a relationship business,” he said.
“I think you would be best served by making sure you do an analysis of those markets that best suit your needs and focusing on making more solid relationships with the markets that you think are of value to you."
Piggybacking on Mogelnicki’s advice, Loupee added that “the key takeaway is a partnership.”
“This is the time to have trusted partnerships with brokers who understand how to navigate this complicated environment and understand how to educate clients so they can make informed decisions,” Loupee said. “Be there for the long haul.”
Prime Insurance Company is an excess and surplus lines insurance company specializing in property and casualty insurance for specialty and unique risks. Prime writes E&S business in all 50 states and is rated 'A' (Excellent) by A.M. Best. By managing underwriting, policy services, risk management and claims handling in-house, Prime has a proven track record of providing insurance services in a cost-effective, focused manner with both the producer and the insured in mind. Prime currently produces in excess of $300 million gross premiums annually and has offices in Salt Lake City, UT; Chicago, IL; Exton, PA; and Naples, FL.
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Tokio Marine HCC - CPLG is the US marketing name used to describe the cyber and professional lines-related insurance operations of Tokio Marine HCC. Tokio Marine HCC is a member of the Tokio Marine Group, a premier global company founded in 1879 with a market capitalization of $37 billion as of September 30, 2021. Headquartered in Houston, Texas, Tokio Marine HCC is a leading specialty insurance group. Tokio Marine HCC’s major domestic insurance companies have financial strength ratings of ‘A+’ (Strong) from S&P Global Ratings, ‘A++’ (Superior) from A.M. Best, and ‘AA-’ (Very Strong) from Fitch Ratings.
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Relation Insurance Services, formerly Ascension Insurance, is a specialty insurance brokerage that offers superior risk-management and benefits-consulting services through our family of brands across the United States. More importantly, we’re a team of experienced professionals who genuinely care. Whether it’s for you, your family, or your business/organization, we want to be the relationship you trust for answers to your questions, solutions for your insurance needs, and peace of mind for your future.
Find Out More
“At a macro level, the fundamental forces that have driven consolidation across the insurance distribution landscape remain as prevalent today as ever”
Trevor Baldwin,
Baldwin Risk Partners
“More specialized, consultative brokers are going to have more new business opportunities than the average firm that’s doing business like they were 30 years ago”
Gerard Vecchio,
MarshBerry
“Sellers no longer view a robust technology offering as a nice-tohave item; if a buyer isn’t bringing technology enhancements as a value proposition to the table, they are going to lose out on more transactions than they win.”
Timothy J. Hall,
Relation Insurance
“Traditionally, financial services have not been the first investment area for most private equity funds, but today, insurance is an attractive industry because it has been stress-tested”
Phil Trem,
MarshBerry
In Partnership with
Read on
Trevor Baldwin
Baldwin Risk Partners
Dan Mogelnicki
Tokio Marine HCC – Cyber & Professional Lines Group
Emily Loupee
Gallagher
Richard Bryant
Prime Insurance Company
Industry experts
2015
2016
2017
2018
2019
12%
10%
8%
6%
4%
2%
0%
All ADIs
Major Banks
Mutual Banks
8%
7.3%
7.5%
3.6%
4.9%
11.3%
5.3%
3.8%
3.6%
3.0%
6.7%
3.8%
1.7%
7.0
Loan Portfolio Growth (2015-2019)
CUA
Billion
$17.44
12%
Newcastle Permanent
Billion
$10.83
1%
Heritage Bank
Billion
$10.09
6%
People's Choice
Billion
$8.81
5%
Teachers Mutual
Billion
$8.04
14%
Find Out More
Founded in 1981, MarshBerry has grown to become the nation’s #1 M&A Advisory Firm and top growth consultant to insurance agents & brokers, specialty distributors, private equity firms, banks & credit unions and insurance carriers, through industry-specific services that include: Merger & Acquisition Advisory, Debt & Equity Capital Raising, Organic Growth Consulting, Market Intelligence and Connect–Peer Exchange Network.
Find Out More
Relation Insurance Services, formerly Ascension Insurance, is a specialty insurance brokerage that offers superior risk-management and benefits-consulting services through our family of brands across the United States. More importantly, we’re a team of experienced professionals who genuinely care. Whether it’s for you, your family, or your business/organization, we want to be the relationship you trust for answers to your questions, solutions for your insurance needs, and peace of mind for your future.
Find Out More
executive insights
Top
Insight Leaders
Overview
General Stats
Insights
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Mashberry
Gerard Vecchio
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Relation Insurance
Timothy J. Hall
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Lorem ipsum dolor sit amet, consectetur adipiscing elit. Tellus in penatibus condimentum malesuada ante vulputate nisi, arcu leo. Amet urna sapien purus vestibulum fermentum a. Cursus metus massa donec sed varius. Nunc enim sit morbi lacus, molestie et nunc. Nullam sed facilisi id malesuada. Ante purus velit, quam scelerisque ultrices scelerisque donec.
Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Baldwin Risk Partner
Trevor Baldwin
“At a macro level, the fundamental forces that have driven consolidation across the insurance distribution landscape remain as prevalent today as ever”
Trevor Baldwin,
Baldwin Risk Partners
“More specialized, consultative brokers are going to have more new business opportunities than the average firm that’s doing business like they were 30 years ago”
Gerard Vecchio,
MarshBerry
“Sellers no longer view a robust technology offering as a nice-tohave item; if a buyer isn’t bringing technology enhancements as a value proposition to the table, they are going to lose out on more transactions than they win.”
Timothy J. Hall,
Relation Insurance
“Traditionally, financial services have not been the first investment area for most private equity funds, but today, insurance is an attractive industry because it has been stress-tested”
Phil Trem,
MarshBerry
In Partnership with
M&A INSIGHTS 2021
Insurance Business America uncovers the answers to brokers’ biggest questions about mergers and
acquisitions, with expert insight from MarshBerry, Baldwin Risk Partners and Relation Insurance
Read on
Trevor Baldwin
Baldwin Risk Partners
Phil Trem
MarshBerry
Timothy J. Hall
Relation Insurance
Gerard Vecchio
MarshBerry
Industry Experts
2015
2016
2017
2018
2019
12%
10%
8%
6%
4%
2%
0%
All ADIs
Major Banks
Mutual Banks
8%
7.3%
7.5%
3.6%
4.9%
11.3%
5.3%
3.8%
3.6%
3.0%
6.7%
3.8%
1.7%
7.0
Loan Portfolio Growth (2015-2019)
TOP 10 MUTUAL BANKS BY TOTAL ASSETS, 2019
CUA
Billion
$17.44
12%
Newcastle Permanent
Billion
$10.83
1%
Heritage Bank
Billion
$10.09
6%
People's Choice
Billion
$8.81
5%
Teachers Mutual
Billion
$8.04
14%
BRP is an award-winning entrepreneur led and inspired insurance distribution holding company delivering solutions that give our clients the peace of mind to pursue their purpose, passion and dreams. Our family of firms’ best-in-class resources and diverse portfolio of services are innovating the industry by taking a holistic and tailored approach to insurance, risk management and employee benefits.
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Founded in 1981, MarshBerry has grown to become the nation’s #1 M&A Advisory Firm and top growth consultant to insurance agents & brokers, specialty distributors, private equity firms, banks & credit unions and insurance carriers, through industry-specific services that include: Merger & Acquisition Advisory, Debt & Equity Capital Raising, Organic Growth Consulting, Market Intelligence and Connect–Peer Exchange Network.
Find Out More
Relation Insurance Services, formerly Ascension Insurance, is a specialty insurance brokerage that offers superior risk-management and benefits-consulting services through our family of brands across the United States. More importantly, we’re a team of experienced professionals who genuinely care. Whether it’s for you, your family, or your business/organization, we want to be the relationship you trust for answers to your questions, solutions for your insurance needs, and peace of mind for your future.
Find Out More
executive insights
Top
Insight Leaders
Overview
General Stats
Insights
Baldwin Risk Partners
Trevor Baldwin
Mashberry
Phil Trem
Relation Insurance
Timothy J. Hall
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Velit egestas vel ornare pellentesque ridiculus. Mauris tempor augue quis mattis suspendisse feugiat commodo posuere. Faucibus massa adipiscing nullam elit, ac vel accumsan. Phasellus eget ac dignissim fermentum ac placerat elit, metus. Nulla porttitor ante egestas molestie quis quam. Pharetra magna sit mauris tellus gravida rutrum libero sit. Justo orci cras euismod proin massa lorem ut. In non tellus phasellus faucibus ullamcorper nullam odio dui et.
Mashberry
Gerard Vecchio
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• #MeToo
#MeToo
#TimesUp
Increased focus on racial injustice and social injustice
Social inflation
Employee classification
Changes to the interpretation of Title VII and other state/local anti-discrimination rules
Illinois' Biometric Information Privacy Act (BIPA) and similar statutes
COVID-19 pandemic
Source: Gallagher 2021 Market Condition Report: Employment Practices Liability
Source: Gallagher 2021 Market Condition Report: Employment Practices Liability
The top four types of allegations made since the start of the pandemic:
1
2
3
4
Retaliation/
whistleblower
Discrimination/
harassment
Workplace safety
and conditions
Wage and hour
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