Specialty Insurance Blog

Insurance Agents/Brokers Value

Insurance agents provide significant value to their customers, but talk of commoditization and disintermediation in insurance won’t go away. At its core, insurance is complex, and matching the right coverage to the each client at a competitive price has significant value. We came across an instructive situation recently. A consulting engineer went to a web site to purchase professional liability and general liability insurance for his small business. He received a very competitive quote which he was inclined to buy. He was loyal to his agent, so he asked for advice. His agent turned to us for the professional liability insurance. The review did not take long – the quote was too good to be true. The coverage excluded the... Read more →

Cyber Risk Insurance is Booming

Cyber Risk insurance is booming because organizations have exposure and the insurance industry has figured out how to transfer this exposure for a reasonable price. So we were surprised to come across an article entitled Why cyber insurance isn't booming (see here). Huh? The Cyber Risk insurance market is booming because of breach events, particularly at small and medium sized businesses (see here), and because the specialty lines insurance business has responded by underwriting the risk. So why does the article note the following (inaccurate) statements: - While the risk of cyberattacks has risen steadily, the market to insure against it has lagged. - Only a few dozen [insurers are] selling cyber insurance - A chief reason that cyber insurance... Read more →

Capital Raising & D&O Insurance

Changes in how companies raise money will create challenges and opportunities in the insurance business, particularly in professional liability. A recent article in the WSJ (see here) noted that companies are increasingly turning to private sources of capital rather than the public markets. This is a critical trend that will have implications for many years if it continues. The article notes that overall public debt and equity issuances fell by 11% between 2009 and 2010, to $1.07 trillion, while private issues rose by 31%, to $1.16 trillion. This shift… will likely accelerate when the SEC implements reforms in the Jumpstart Our Business Startups Act. (see our prior post) While the article points out the costs and regulatory challenges of being... Read more →