Received a Non-Renewal Notice? When Requesting a Professional Liability Quote, Don’t Hide it.
Eman Wilder, CPIA, CISR, M.ASCE Account Executive—ASCE Member Insurance
For an engineering firm, receiving a non-renewal notice from your professional liability insurance carrier can be stressful. A non-renewal can occur for many reasons, including changes in the carrier’s underwriting appetite, claim activity, changes in the firm’s services or project types, or the carrier reducing its exposure to a particular class of business.
In recent years, insurance carriers have changed their underwriting guidelines or have even withdrawn from certain states altogether, usually part of a strategic decision to manage loss trends and rising claim severities across their profile. The result has often been non-renewal of otherwise loyal policyholders.
The first reaction may be to simply start looking for another insurance company and hope the non-renewal does not create a problem when obtaining a new quote.
However, the best approach is the opposite. Be upfront and transparent with your insurance broker and the new carrier about the non-renewal.
Always Provide the Non-Renewal Notice
The underwriter will want to understand why the current carrier is not renewing the policy; providing the non-renewal notice can help the new carrier see the reason listed on the notice.
Simply having the non-renewal notice does not automatically mean your firm cannot obtain coverage. In fact, experienced professional liability underwriters understand that a carrier’s appetite can change. The key is to give the underwriter enough information to properly evaluate the risk.
Protecting Your Previous Coverage and Retroactive Dates
Professional liability insurance is unique from many other types of commercial insurance. Most professional liability policies are written on a claims-made basis, which makes the firm’s prior coverage, retroactive date, claims history, and knowledge of potential claims extremely important when moving from one carrier to another. Engineering firms should not assume that changing carriers means their previous exposure disappears.
One of the biggest mistakes an engineering firm can make is waiting until the last minute to address a non-renewal. The more time your broker has, the more options there may be to approach the appropriate professional liability markets and explain the firm’s situation. Architect and engineer liability carriers have different underwriting criteria, including the types of engineering services performed, project types, firm size, claims history, and limits being requested.
It is also important to review the firm’s claims and potential claims before changing carriers. If the firm is aware of circumstances that could potentially lead to a claim, those circumstances need to be reported to the current carrier before the policy expires. Failing to properly report a claim or circumstance can create significant coverage issues later.
The Lowest Premium Does Not Equal the Best Choice
Don’t focus solely on getting the lowest premium. When replacing professional liability coverage, the firm should compare the retroactive date, prior-acts coverage, exclusions, limits, deductibles, policy terms, and claims handling. Not just the price.
A non-renewal notice is not a reason to panic. Look at it as an opportunity to review past coverages, endorsements, and different types of policies that may be available. Starting the renewal process early, providing complete and accurate information, and working with an insurance professional who understands the unique risks facing engineering firms can all help with a smooth transition.
The goal is not simply to find another carrier. The goal is to find the right carrier and make sure your firm’s coverage continues without creating an unexpected gap in protection.
