From Ukraine to PFAS, Here’s What You Missed at the CPCU Society Reinsurance and Excess and Surplus Symposium

CPCU Society's annual Reinsurance & Excess Surplus Lines Symposium was a virtual two-days experience of education, networking and fun.

By: Abi Potter Clough | March 28, 2022

Members of the risk and insurance industry recently convened for the annual Reinsurance & Excess Surplus Lines Symposium held virtually on March 9-10. Sponsored by the CPCU Society’s Reinsurance & Excess Surplus Lines Interest Group, the virtual conference attracted 100 attendees over its two days.

The event has long been a favorite in the reinsurance community, but this year it was expanded to include professionals in the excess and surplus lines field.

Four panels over two days covered wide-ranging topics and emerging issues appealing to a broad range of reinsurance professionals. Each session encouraged participants to think about risk in different ways, with perspectives from senior leaders, reinsurers, risk managers, and specialists.

Expert Panels Cover Emerging Trends

With four expert panels spread over two days, the conference focus was on in-depth discussions and deep dives into trending topics and emerging issues. While the sessions were virtual, there were plenty of opportunities for interaction, networking, and Q&A among the panelists and participants.

There was even an opportunity for fun with a networking reception and piano bar hosted by Greg Offner, a musician, keynote speaker, and past insurance producer. Taking requests from the audience including Elton John, Britney Spears, and Neil Diamond, Greg and his partner skillfully entertained the virtual room and provided a space for networking and fun.

View from the Top

The symposium began with a “view from the top” discussion with industry leaders. The panel focused on challenges disrupting the industry. Global events like the war in Ukraine, supply chain issues, and the risk of a recession were all discussed.

The conversation then narrowed to a focused discussion around challenges with social inflation and nuclear verdicts. The panel discussed the rising costs of jury verdicts, with runaway verdicts costing twice as much as in the past in some jurisdictions. The session wrapped up with a conversation on growing cyber risks and new market opportunities including cannabis exposures.

Climate Change and Water Resilience

The climate change session featured perspectives from a meteorologist as well as reinsurance experts examining the impact of extreme weather conditions on rainfall, snowmelt, and more. All three panelists stressed the importance of resilience in their presentations.

Fred Parcells, CPCU, ARM, ARe, AVP corporate underwriting products, AmeriTrust Group, summarized the session, saying, “In today’s climate-change impacted world, having a water resilience strategy is essential. Ranging from hurricane-induced flooding to the worst megadrought in the Western U.S. in 1,200 years and everything in-between, businesses and individuals must be able to adapt accordingly to environmental conditions.”

Elaborating on his main point from the session, James Martin, head of client management & business development, Americas region, AXA XL, explained, “Companies need to understand their relationship with water and rethink their strategies to transform their business models in order to build a more water-secure world.”

“If they don’t, not only could they be affected themselves by lack of water quality or access for operations, but they could also be held accountable for the impacts they have to water systems and communities,” Martin said. “Ultimately, they may also miss key opportunities to progress in a world where resilience will be key.”

Dan Ward, Senior Meteorologist at Karen Clark, spoke about how models can help illustrate changes in weather patterns from climate change. “Atmospheric hazards like hurricanes and floods respond differently to climate change, meaning each has different implications for risk in our warming world,” Ward said.

“There is a real opportunity in this moment for catastrophe models to help the insurance/reinsurance industry understand how climate change has altered the risk from natural hazards already, and what the future holds,” he said.

For Ward, “filling this important role requires that catastrophe models incorporate the current scientific understanding of climate trends. This ensures that assessments of risk will include the changes in the atmosphere and oceans that have occurred to-date.”

Rising Stars and Emerging Talent

The second day of the symposium started with a session sponsored by Gamma Iota Sigma, the international fraternity for insurance, actuary, and risk management students. GIS has 97 chapters with over 5000 members.

With the talent gap and the Great Recession hitting the insurance and risk management industry particularly hard, the panel focused on the perspectives of recent graduates, young professionals, and current students and discussed ways to attract and retain talent.

Global opportunities, networking, diversity, and meaningful access to senior leaders were among the reasons the panelists were attracted to their current employers.

Per- and Polyfluoroalkyl (PFAS) Substances Panel

The symposium concluded with a deep-dive discussion into per- and polyfluoroalkyl substances, or PFAS. The panel helped to define PFAS and talked about the potential risks to human health. Current and future litigation and coverage issues were also raised.

Lucian McMahon, CPCU, senior manager, casualty analytics, Verisk

Lucian McMahon, CPCU, senior manager, casualty analytics, extreme event solutions at Verisk, commented on the emerging nature of PFAS issues, saying, “Litigation has already resulted in billions of dollars in awards and settlements in the U.S., and appears to only be spreading.”

“Because of their ubiquity, PFAS liability exposures can touch many commercial insureds — and insurers will need to understand how this risk may accumulate across their portfolios and will need to think holistically about managing their exposure,” McMahon said.

The panel highlighted the importance of focusing on PFAS as an emerging trend. Insurers and risk managers need to manage questions about exposure, coverage, and litigation. And with the prevalence of PFAS in our environment, the risk is here to stay.

Join Us for the Next Reinsurance & Excess Surplus Lines Symposium

Kelli Kukulka, SVP, treaty underwriter at RenaissanceRe U.S. and chair of the Reinsurance and Excess Surplus Lines Interest Group summarized the event by saying, “Another CPCU Society RE&S Symposium done.”

“Now we can relax and reflect upon the past, how wonderful it will be to get together in person again, and the emerging exposures that we’ve talked about over the last few years — cyber, 3-D printing, concussions, cannabis, vaping, and now PFAs,” Kukulka said.

“In spite of those emerging risks, I walked away from the symposium this year energized with the thought of ‘how do I get the word out’ to more people about our industry and what an interesting and rewarding career in reinsurance or excess & surplus lines can be,” she added.

CPCUs who attended the full symposium earned seven CE hours toward their ongoing education requirements. But the symposium is open to anyone — CPCU membership is not required to attend.

Watch for news about next year’s Reinsurance & Excess Surplus Lines Symposium. Whether back in person or held virtually, there is sure to be great educational content to explore. &

Abi Potter Clough, MBA, CPCU, is a keynote speaker, author and business consultant focused on Insurtech, leadership and strategy. She has over 15 years of experience at a Fortune 500 company with expertise in P&C claims operational leadership, lean management consulting, digital communications and Insurtech. As the past chair of the International Insurance Interest Group of the CPCU Society, Abi remains involved in many international initiatives and projects. She has published two books about change management and relocation. Abi can be reached at [email protected].

Why Insureds Might See an Uptick in M&PL Claims

George Schalick, Jr., Senior Vice President of the Management and Professional Liability Division, Philadelphia Insurance Companies

The current soft market might come as a bit of a surprise as it does not track with previous underwriting cycles and economic conditions. Afterall, many privately held and non-profit organizations struggled during the early days of the pandemic with shutdowns and rapidly declining revenues. But the Government assistance programs, like the Paycheck Protection Program loans, helped keep many afloat during the tough times.

“During COVID many organizations stopped doing business until they were able to sort out all of the health and safety challenges,” Schalick said. “They were forced to lock down, but then all the government assistance programs allowed them to keep people employed. The increased volume of claims we anticipated we would see coming from the lockdowns and restrictions that were imposed upon businesses in the U.S. didn’t manifest at first.”

“Just because there wasn’t an onslaught of reported claims at the beginning of the pandemic, doesn’t mean the circumstances that would give rise to a claim being reported didn’t occur. Courts and the judicial system were closed or slowed and now that they are back open, we’re starting to see the circumstances that occurred during the COVID lockdowns becoming claims today,” Schalick said. “Litigation is progressing.”

Added to the delayed pandemic litigation is a concern over newer claims that might be filed as the country inches toward an economic downturn. Though a recession was avoided in 2023, experts think a soft dip could occur in 2024, with 76% of economists saying there’s a 50% or less chance of an economic downturn this year — that almost always results in more management liability claims.

“During the Great Recession in 2008, we saw an almost immediate spike in claims because of the economic conditions and the pressure it placed on organizations. They were making personnel changes with significant belt tightening almost immediately.” Schalick said.

What’s in Store for M&PL Policy Rates in 2024?

Despite an uptick in claims and increased economic uncertainty, management liability rates haven’t increased, resulting in market-wide pricing levels that may not meet the increased pressure of rising settlements and jury verdicts.

“Rates are going the other direction and settlement values are not falling,” Schalick said.

The mismatch between rates, claim frequency and severity is, in part, because carriers experiencing the dramatic soft market in the public D&O market are seeking premium gain in the private and non-profit market.

“In the public company market, the rates have been decreasing significantly. The rates were increasing in the private, not-for-profit market, and rightfully so, but there’s a desire to supplement overall mid-size D&O for carriers who also write private not-for-profit, and they see that as an opportunity to aggregate premium,” Schalick said. “So the always competitive landscape in the private, not-for-profit market has dramatically increased in the last 18 to 24 months.”

Still, companies of all sizes and types should be concerned about management liability rates in the future. Legal system abuse is resulting in increases in both the amount of litigation and the size of verdicts plaintiffs are receiving.

Certain areas of the country are particularly vulnerable to this type of legal system abuse. As a result, insureds in these localities are likely to be vulnerable to rate increases.

“The environment is so positive for the plaintiff that forces premium increases so carriers are able to stay in that market long term,” Schalick said.

Why a Tenured Carrier Partner Can Help Insureds Navigate An Uncertain Market

It’s clear that insureds are facing an uncertain M&PL market over the next few years. Fortunately, carriers with a long history in the M&PL space will be there to offer stability.

Philadelphia Insurance Companies has been supporting this market for 35 years. PHLY is committed to offering long-term rate stability, even as economic and claims trends start to push premiums upwards. They have an appetite for all sorts of companies, large and small, for-profit and nonprofit alike.

“We’ve been at this game for a long time and are one of the most tenured underwriters in this space,” Schalick said. “We like to stay very consistent.”

PHLY has worked with both for-profit and non-profit on management liability policies. With dedicated M&PL teams throughout the company’s 13 regions, PHLY provides the support agents and brokers are looking for on behalf of their clients. The teams know their regions well and can respond to local trends. They’re also dedicated to making the renewal process as easy as possible for their partners and policyholders.

“We have real confidence in our results, so we focus a lot on making the renewal experience as painless as possible for all agents and insureds,” Schalick said.

The company is also investing in tools to help insureds avoid losses. Earlier this year, they launched a new online risk management platform, PHLYGateway, which offers resources for insureds on how to create an employee handbook and trainings on issues such as recognizing workplace sexual harassment and discrimination.

If insureds have questions, they can consult a Best Practices Help Line, provided via the platform. That way, they can get on the spot risk management guidance to help them prevent claims.

To learn more, visit: https://www.phly.com/mplDivision/managementLiability/default.aspx.

This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Philadelphia Insurance Companies. The editorial staff of Risk & Insurance had no role in its preparation.