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Part 3: Threats, Trends & Policies That Shaped Insurance Markets in 2019

Written by John Mina | Jan 23, 2020 5:22:00 PM

This is part three of a three-part blog series in which we share the highlights of the insurance industry in 2019.

Architects & Engineers (A&E)

Green building design is one of the hottest trends in architecture, but a lot can go wrong when a project involves the latest, and possibly untested, materials and techniques. There’s no guarantee that a project will achieve LEED certification once it’s finished, even if that’s what the client demands. We wrote about how A&E firms can avoid the pitfalls of guaranteeing LEED certification to green-minded clients.

Another exposure A&E firms can encounter is when they need to rely on subcontractors to design and install individual elements of a project. This practice, known as design delegation opens the doors to liability if contracts aren’t carefully scrutinized with a risk management team.

Entertainment & Media

From our entertainment and media practice, we looked at some of the risks involved in 21st century filmmaking. Extreme weather events can turn a potential blockbuster production into a money pit. Hurricanes, wildfires, typhoons and smog are among the factors that often derail filming in some of the biggest production hubs in the world. We showcased some creative insurance solutions to the problem of weather, like a post-Hurricane Katrina bespoke insurance program that spreads risk in and out of hurricane season in Louisiana. A similar program in Puerto Rico used tax credits to revitalize the film industry after the devastation caused by Hurricane Maria.

In today’s volatile world, TV and film projects also face political risk and political violence, or terrorism, around the world. When violence erupts in a filming location, a tailored insurance program can help ensure that the show will go on.

Claims Management and Employment Practices

Legislation aimed at protecting workers was introduced in 2019 on both the state and federal level. When these laws are passed or go into effect in 2020, employers will need to change some of their employment practices to comply, or else be hit with financial penalties.

First, the Ascuncion Valdivia Heat Illness and Fatality Prevention Act of 2019, was introduced in the House in July. If passed, it will combat the dangers that excessive heat poses to people who work outside, or without air-conditioning. The law requires OSHA to create federal heat-related workplace standards, like mandatory water and shade breaks and medical training for heat-related illnesses.

The second major piece of legislation we covered was Assembly Bill 5 (AB5), which was signed into law in California in September. AB5 is intended to protect workers in the gig economy by ensuring they receive benefits like health insurance, paid sick time and workers’ compensation coverage. The law could upend the ride-hailing (i.e. Uber and Lyft) and trucking industries in California which are primarily made up of independent contractors. Employers in those industries in California will soon have to absorb the enormous costs of providing employee benefits. We’ll continue to follow this trend closely.

Professional/Executive Liability

For buyers of Directors & Officers (D&O) insurance, 2019 was a tough year. Fewer insurers are willing to write D&O accounts, and the ones that do are charging more. We explored some of the reasons behind the hardening D&O marketplace, including a year of the largest class action securities settlements paid out in history, fewer public listed companies, a spike in the number of lawsuits, #MeToo, policy changes at AIG, and ripples of the pivotal Supreme Court ruling known as Cyan that makes it easier for plaintiffs to file securities lawsuits in state courts. Working with a broker that has access to and leverage in the D&O marketplace will be critical going forward.

Private Client

We dedicated much of our coverage in 2019 to the imminent threats that climate change poses to our way of life, and how those threats will only continue to grow. One year after the most devastating wildfires in California history, the insurance marketplace in California has tightened to unprecedented levels. Insurers dropped 350,000 homeowner policies in California’s most volatile wildfire zones. And it’s not just California that’s tightening. Claims from weather event are at historic highs in Florida and the Midwest. Private clients, who tend to own multiple homes in vulnerable areas need to work with their risk advisors who have access to the insurance marketplace.

For our private clients, we also looked at some of the dangers and exposure of over-sharing on social media. Broadcasting your ski trip to Chamonix may be fun at the time, but it also lets bad actors know exactly when your home is empty and ripe for a break-in. Posting details of a college semester abroad on Instagram increases the risk of kidnapping for ransom. Read the blog for our common-sense guide to social media best practices.

Looking Ahead

As we look ahead at 2020, the team of specialty industry experts at Risk Strategies will continue to follow the national and global trends.  We’ll develop solutions to combat the new threats and advise on changing policies and decisions. And we will continue to make sure they are prepared for the challenges and risks that are to come.