Tips for Tackling Your Insurance Program in 2023

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Renee Hellman, Principal at Marsh McLennan Agency

When it comes to renewing your organization’s business insurance program, there are many things to consider: Do you have the right products in place? Do you have all your needs covered? Are you getting the best deal?

During the past few years, the insurance market has experienced instability due to economic factors and the COVID-19 pandemic, resulting in steady rate increases from year to year. In fact, the market saw 20 consecutive quarters of increased rates.

In the last two years alone, Marsh McLennan Agency tracked average rate increases of 24%, with the number falling to an average increase of 5% across all lines of coverage in the final quarter of 2022. This brisk drop in rates makes now an ideal time to perform thorough due diligence on current programs. Combining data from market trend reports conducted by Marsh McLennan Agency, recent legislation, and market updates, we offer some key elements to consider when reviewing your current program.

MICRA legislative changes The passage of California Assembly Bill 35 (AB 35) introduced significant changes to the state’s Medical Injury Compensation Reform Act (MICRA), with far-reaching implications for the future. AB 35, which became law earlier this year, amended key provisions of MICRA, leading to mixed reactions among insurance carriers. MICRA’s central element was a $250,000 cap on noneconomic damages, such as pain and suffering, per plaintiff. However, AB 35 has increased these caps, with annual incremental increases going forward. For non-death cases, the cap has risen to $350,000, and for cases involving patient death, it now stands at $500,000. Additionally, AB 35 has raised attorney contingency fees.

These changes have prompted insurance carriers to anticipate a surge in both the frequency and severity of claims. Plaintiffs and their attorneys can now pursue higher compensation, which incentivizes increased litigation. On the other hand, carriers are taking different approaches to address the potential impact. Some have imposed rate increases of up to 20%, while others are adopting more measured adjustments of 5-10%. Each carrier’s response also depends on various factors like specialty, loss experience, and geography.

It is crucial for organizations to have early renewal discussions with their professional liability insurers to ascertain the carriers’ rate expectations at renewal and create a plan moving forward. For clients insured with carriers projecting double-digit rate increases, it is important to consider creative program structures and possibly even alternative insurance carrier options to mitigate rising costs. Insurance carriers are bracing themselves for an increase in claims activity, adjusting their rates accordingly, and encouraging clients to consider alternative insurance options to manage potential cost increases.

Website tracking

There is growing interest regarding website tracking and the ramifications for litigation. This can affect all classes of business, though hospitals seem to be among the most impacted. In its most recognized form, when you save login credentials to websites on your personal device, the tracking is stored in “cookies.” Cookies are a form of tracking that do not follow you from system to system. You can decline use of cookies and/or delete cookies when done with a website session. This is a key distinction to remember.

In its more subtle form, tracking can be done via pixels or analytics - this form of tracking cannot be deleted nor declined.

For example, this is how targeted advertising works. You’ll recognize this to be the case when you move from website to website and from system to system, and it seems that advertisements are very relevant and specific to you. This is usually (but not always) the result of pixels or analytics.

If a website uses tracking, every time you click on links, select icons, or input information, it may be tracked in ways that you are unlikely to be made aware of. This tracking is not new, but due to increased focus from litigators and insurers on expanding privacy laws and regulations, it is now under more scrutiny.

Therefore, some classes of business may be more impacted than others; think healthcare, or financial, or any other class of business using websites to capture or display Personally Identifiable Information, Payment Card Industry Data, or Personal Health information.

The use of embedded pixels and analytics within websites is not a requirement for websites to work. As we are seeing a rise in claims around tracking, organizations may want to advise their website developer to disable, or better yet, remove this type of tracking from their websites to avoid litigation.

Property coverage

The property market continues to be challenged with rate hikes, despite rates falling for other lines of coverage. A major factor to consider here is wildfire scores - organizations with risk in CAT zones can expect to see above average rate increases, as well as carriers dropping the limit they are willing to take on, leading to a more diversified tower. In March 2023, rates increased 19.4%, slightly down from 20.1% in the month prior.

It’s imperative that organizations carefully consider these items and act accordingly when it comes time to renew commercial insurance programs. It’s equally important that broker partners also consider the importance of these impending legislative changes and current state of the market to obtain the most competitive pricing for an organization’s program. Marsh McLennan Agency’s Business Insurance Trends report dives into additional risks that organizations should be tracking as they monitor potential exposures.

If you have questions around these topics and how Marsh McLennan Agency can assist as a broker partner, please don’t hesitate to reach out.