Several notable new or enhanced coverages are available in the marketplace:
- Pre-Claims Defense Costs Endorsement: Due to the increased scrutiny of the SEC and other regulatory bodies, there was a need to address the expenses incurred by informal investigations, which have historically been uncovered claims as carriers do not wish to cover routine exams, sweeps or deficiency letters, when they morph into covered claims. This has been addressed by allowing policyholders to offset their retentions paid out prior to a notice of circumstance evolving into a covered claim. There are various approaches being taken by carriers to offering pre-claims coverage, and we would be glad to explain them to you.
- Mock Audit Exam Services Enhancement: Chubb was the first carrier to offer a partial reimbursement of mock audit costs, and we expect other carriers will follow suit. This has been very popular with our insureds, and several have already filed for reimbursement. Ask us to explain in more detail.
- Expanded Definition of Claim: The Definition of Claim (and Loss) has continued to evolve, pushed by savvy policyholders and coverage experts, and rightly so, as these definitions have a large bearing on coverage. If you have not had these definitions reviewed and updated on an annual basis, we strongly suggest you begin doing so. Examples of expanded definitions include: taking into consideration extrinsic evidence, including events like subpoenas and search warrants, arbitration, and “based upon, arising out of or alleging the obligation to perform”. We would be happy to review your policy for deficiencies.
Despite what appears to be ample competition, carriers are still picking their spots in the market, and it is common to see just 25-33% of markets approached actually offer terms. We routinely hear “we would only be interested on an excess basis”, or “unfortunately this one falls outside our strategy”.
There are new market entrants like Berkshire Hathaway, and recent newcomers like Argo Pro and stepping up to quote on more submissions.
There are claims occurring and we have handled a record number in the last 12 months. Aggrieved investors and regulatory inquiries are the leading causes of claims.
From a pricing standpoint, we have seen most renewals stay flat or occasionally decrease, reflecting a fairly soft market.