In this blog series, PLUS consults industry experts to discuss current trends in the market. This edition features Chris Zanchelli, a well-known professional in the Management Liability space. In this interview, Chris highlights risks and trends in the D&O market such as social inflation and cyber exposure.
To start, please tell us a little about your role and experience in the professional liability insurance (PLI) industry.
I am the Vice President of Underwriting at Berkley Select. I lead our Management Liability team which handles private company and Non-Profit D&O, EPLI, and Fiduciary Liability. I’ve been with Berkley Select for over 14 years in a variety of underwriting and leadership positions. Prior to my time here, I had a brief stint on the wholesale brokerage side of the business. I began my insurance career at AIG in 2006.
Are there any current trends in the industry that you are keeping an eye on?
We’ve seen the Management Liability market soften in a meaningful way in the past 12 months. New capacity in the space and a shift toward data-driven/algorithm-based underwriting operations have exacerbated the deceleration of D&O rates. The EPL market is more geographically sensitive with more liberal venues like California and New York passing plaintiff-friendly legislation seemingly every quarter.
What makes these trends worth keeping an eye on?
I think logic would tell you that rates in our space SHOULD be on the rise. Inflation is high right now. We could be headed towards a recession. Additionally, the impact of social inflation is very real. The cost to defend/settle claims is also increasing. The push for ESG by activist groups and push-back against it by many legislators creates some unknowns in the industry. New legislation (BIPA/PAGA/et al.) constantly presents new challenges for carriers. All of these trends would indicate headwinds of higher costs/increased claims for carriers. Interestingly though, rates are slowly coming down from what they were months ago.
What are the top emerging risks for the PLI industry?
Cyber exposure continues to be a huge risk in the D&O space. Things like cyber-attacks, data loss, and cyber extorsion certainly keep executives from sleeping soundly. Additionally, more aggressive and proactive regulators have led to increased regulatory risk in recent years (focus on consumer protection, emphasis on ESG issues, etc.). In the EPLI space, Wage & Hour claims continue to be problematic for all carriers. We’ve seen reptile litigation tactics lead to some larger verdicts and settlements, especially in California.
If someone is interested in learning more about these topics are there other resources you would recommend for more information?
I would encourage them to follow a lot of the content disseminated from great organizations like PLUS. There is so much good content that comes from blogs, webinars, articles from industry experts, etc. At Berkley Select, we’re proud to partner with Zywave to provide our EPL policyholders with free access to pre-claim risk management services as well as topical Employment risk content that can be sorted by industry, geography, and so much more. Staying proactive about your exposures as an executive and as an employer is always a good thing in the long term.