I am reaching out to you because you have some renewal business coming up with us in the next few months.
We are seeing some of our smaller renewals choose to lapse their insurance policies during these difficult times. As much of our business is Professional Liability, it may be that your client feels that since he/she is not generating any revenue they don’t need to keep their insurance in force. Some are requesting to trigger an Extended Reporting period, with a view to reinstating the policy once things pick up again. Obviously, times are tough especially for small independent businesses in service industries, and it’s a sad fact that a number of companies won’t make it through this.
But for those that will, I’m sure you know that they would be better off to maintain their insurance if they can. Often consultants have projects and jobs that stretch on, and even if the project is on hold, their clients may still be calling them and seeking advice for the future. I have in mind one case I saw recently for a wedding planner. Most weddings are not being cancelled, they are being postponed, and so even though the planner is not generating any revenue right now, she is still working; rescheduling dates, talking to clients etc. Obviously, an ERP will not cover a loss arising from a claim that happens after the policy has lapsed. In my experience, as many as 75% of the claims on a claims-made E & O policy can arise from occurrences that happened before the policy was in force (except for start-up companies, of course!)
We recognize it’s not reasonable to charge a large premium when the exposure has diminished so we are taking a flexible approach on our minimum premium requirements. Please talk to one of our underwriters before your client non renews. We may be able to come up with a solution.
Stay well and thanks for the continued support.