State of the Insurance Market Report

2024 Initial Outlook:
Professional Services Insurance

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Market Updates

The post-pandemic shift towards returning to in-office work accelerated last year. Many architecture and engineering (A&E) firms and law firms now require employees to be in the office at least four days a week.

Attracting and retaining talent remains a major challenge for A&E leadership. Firms are acquiring boutique businesses with specialized expertise to enhance or expand client offerings.

Law firms remain cautious and some implemented layoffs and/or delayed employee start dates by six months or more. Firms hope these actions will provide a financial cushion if an economic slowdown impacts available work.

2025 State of the Insurance Market: Initial Outlook and 2024 Wrap-Up

Glass Building Reflection

 

Coverage Considerations

Social inflation and increased costs of defense continue to drive small rate increases, but the professional liability (PL) market is softening.

Firms with favorable loss histories — along with a willingness to approach alternative markets and provide detailed underwriting submissions — should not experience rate increases and can even hope for a slight rate decrease. In 2024, Risk Strategies expects continued competition to lead to more favorable terms and pricing, particularly for firms with good risk profiles.

Architects and Engineers

Project-specific insurance capacity for multi-family residential and other high-risk project types remains scarce. This is causing owners to insist on higher limits on firms’ professional liability (PL). At the same time, insurers are limiting how much they will cover in a primary policy. So, A&E firms are increasingly using quota share and excess layers to get the coverage limits they need.

Rate Forecast
Professional Services - Architects & Engineers: -5% to +5%
Professional Services - Law Firms: -5% to +5%

 

With higher limits and multiple insurers on a single program, there is a renewed emphasis by underwriters on minimum deductibles and/or self-insured retentions. Large A&E firms are managing general liability, workers’ compensation, and auto coverage costs by exploring alternative risk financing options, including captives. Captives are for liability coverage only. Property coverage must be placed on a stand-alone basis, which is especially difficult for firms on the coast.

New market entrants in London have shown a renewed interest in A&E professional liability coverage for smaller firms. This increased competition abroad will eventually lead to more favorable terms stateside.  

Law Firms

Lawyers’ professional liability (LPL) insurance rate increases moderated in 2023, as new markets began writing LPL. Domestic markets are fiercely competing with one another to win law firm business. Carriers are providing broad terms and competitive pricing to entice firms to choose them. This has given small and some mid-sized law firms renewal options and stronger bargaining power when selecting insurance coverage.

For larger firms, new market entrants are competing for business on excess layers. Insurers in the Bermuda market increased high excess layer pricing due to a recent catastrophe claim.

Recommendations

  • Layoffs and forced return-to-work policies can lead to employment practices liability (EPL) claims. Ensure adequate coverage is in place before taking action.
  • When securing excess liability coverage, use follow-form policies and clearly lay out claims administration protocols.
  • If acquiring smaller firms through "assets only" acquisitions, purchase extended reporting periods — or “tail coverage” — to cover the acquired firm’s prior acts liability.
  • Maintain open and transparent communication with underwriters. Address any concerns or inquiries promptly. A collaborative relationship helps underwriters understand your risk management strategies and could result in more favorable underwriting outcomes.
  • Submit a detailed renewal letter instead of, or in addition to, a standardized application in your underwriting submission. Provide a comprehensive overview of your operations and claims history. Offer details on risk management including updated policies and procedures (including AI), IT improvements, claims prevention, and risk mitigation.
  • Large and mid-sized firms should have in-person meetings with underwriters.
  • Consider working with Managing General Underwriters (MGUs), as they are a faster, more efficient way to secure additional insurance capacity. MGUs provide access to new capacity via specialized and experienced underwriting, streamlining the renewal process.

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The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.