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Growth opportunities abound in professional liability MarketStance data indicates that many firms remain uninsured The top 25 E&O classes (excluding med mal) account for written premiums in excess of $9.6 billion, representing 5% of total commercial premiums written, according to data compiled by MarketStance, Middletown, Connecticut. There are 4.5 million enterprises in these classes, with the vast majority (80.8%) being one-person professional service companies with no employees; another 18.4% are small firms with fewer than 50 employees. Only 9% of the zero-employee firms and 34% of the small firms have purchased professional liability coverage, indicating that there is opportunity if agents can convince these professionals of the need for coverage and find a market that is willing to provide coverage at a reasonable cost. In addition, these enterprises also are showing strong internal growth that should provide for opportunity from current professional clients. MarketStance data shows the four-year growth rate for 1999 through 2003 was 4.1%, and that is projected to rise to 5.5% for the 2003 through 2007 period. Offices of lawyers represent the largest E&O class, providing $3.3 billion in professional liability premiums written and total premiums written of $3.9 billion. They are followed by engineering service firms—$3.2 billion in professional liability premiums and total premiums of $3.7 billion; architectural service firms—$494 million in professional liability premiums and $839 million in total premiums. In all, there are 13 classes that provide in excess of $100 million in professional liability premiums, including professionals involved in securities, accounting, insurance, real estate, temporary help, and child day care.
Professional liability breakdown by states Not surprisingly, California has the largest number of enterprises in the top 25 E&O classes, with more than 619,000 firms, providing nearly $2.2 billion in E&O premium and nearly $3.6 billion in total P-C written premiums. New York is the next largest state in terms of premium, with $1.1 billion in E&O premium and $1.9 billion in total premium on more than 309,000 enterprises. However, Texas boasts more firms in the category with nearly 329,000, but its E&O premiums are only $477 million and total written premiums are nearly $899 million. Florida has almost an identical number of enterprises as New York with more than 309,000, representing $537 million in E&O premiums and nearly $984 million in total premiums. Illinois is the third largest state in terms of E&O premium, with the top 25 classes providing $641 million and total P-C premiums of nearly $982 million. However, the premiums are derived from just under 193,000 enterprises. The larger premium figures shown by New York and Illinois reflect the number of larger professional service companies headquartered in those states. * For more information: |
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