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London and European Market Status Report March 2021

By April 23, 2021June 25th, 2021No Comments

With the 1st January renewals behind us, we would like to take the opportunity to reflect and share our expectations for the performance of the London and European markets for this coming year

The market has entered 2021 in a strong position. While we expect Professional Liability rates to continue to rise, it will be at a slower pace than in 2020. The market will continue to differentiate between Insureds, and therefore those with healthier claims records and robust risk management protocols will be treated more favourably.

There is no doubt that 2020 presented us all with unique personal and industry challenges, the likes of which we had not witnessed before. In recent years, the Professional Liability market has experienced several loss-making years, some dislocation within insurers and the movement of underwriting personnel. However, insurers have largely corrected their underwriting portfolios, through a process of re-underwriting, readjusting their capacity commitments and increasing pricing. All these remedial developments have enabled the new and some existing Professional Liability carriers to go into 2021 in a far stronger position than for many years.

Large law firms that purchase substantial towers of insurance coverage, may continue to experience demands for double- digit rate increases, as the excess layer markets attempt to recoup from some severe losses. However, new capacity has already entered the market, both in the company and Lloyd’s sectors, and many Lloyd’s syndicates have increased their anticipated Professional Liability underwriting for 2021. This will inevitably create competition and have some dampening effect on these rate increases.

Large Architects and Engineers with less than stellar claims records will also likely see rate increases on a primary basis but again this will be tempered by new entrants into the market.

Unlike other markets, accounts will continue to be differentiated depending on a number of factors, such as loss record, how they navigated the COVID-19 challenges, their preparations for a potential economic downturn, and finally culture and adherence to strong risk management policies.

COVID-19 risks will remain a challenge for insurers and the market will grapple with respect to the effect it has had both on clients and the greater economy. We are happy to assist brokers and their clients/prospects to best position themselves to respond to underwriters’ concerns.

In summary, there is a robust market for US Professional Liability business, with plentiful capacity for individual risks across multiple layers of insurance. We are confident that our team can negotiate vigorously to assist our retail partners in mitigating the increased cost of Professional Liability insurance.

As has always been the case, advanced preparation and planning are the key factors to maximise the best response from the London market. Working from home has been remarkably efficient, but has at times increased the time it takes to get responses.

Our recommendation is to start prospecting for the renewal process with clients a little earlier than in the past and we are here to help manage expectations in this reduced face-to-face environment


Rates will continue to increase significantly for professional services firms, as claims deteriorate and the domestic market continues to exit the primary layers. We witnessed renewal increases of 30% to 40% in 2020 and anticipate similar increases being sought this year. Beazley and Markel remain the key primary markets globally for US fi.We do, however, expect Arcadia, which has offices in Bermuda and Dublin, to begin providing welcome alternative primary capacity.


The pandemic has proved once and for all that hackers are less discerning about whom they attack and no amount of risk management will prevent a determined hacker. Sophisticated hackers are able to shut down a firm’s system and keep it closed until a ransom is paid. The most troubling aspect is that there is often no logic as to why hackers attack any given Insured.

Like the rest of the Cyber market, rates are increasing rapidly, in the 20% to 25% range, capacity is reducing and wordings are being reviewed. Professional service firms were once considered a less lucrative target for hackers, but this attitude has changed. Losses are increasing exponentially both on a frequency and a severity basis, and purchasing a cyber policy should no longer be considered an additional option, but rather a financial protection necessity.

The market is changing quickly with some insurers exiting but at the same time new insurers entering the market. Each renewal will be a challenge but we are confident that sufficient capacity exists.

Insurers will differentiate much more strongly based on each client’s security infrastructure and will be interested not only in a client’s cyber defense strategy to keep hackers out of a system but also their internal risk management controls and procedures if they do manage to access systems.


We are in close consultation with the London and European markets as to how they want to handle so called ‘Silent Cyber Risks’. The London market hopes to lead the way in clarifying the extent to which Professional Liability policies provide Cyber coverage. We will of course resist any effort to diminish the extent of any Professional Liability cover in existing policies, but understand there is a need to clarify certain first-party expenses, which may not appropriately belong under a Professional Liability policy. We will continue to ensure that we maximise the protection available to our clients, whilst the markets seek to clarify their position in this regard.


Professional Liability

At Paragon, we collected over $65 million in claims for our Professional Liability clients in 2020, which was a 40% increase from the prior year. The incurred claims figure is likely to be greater than $100 million, when collections are combined with current reserves, as we believe underwriters are holding for claims not yet crystalised. We are aware anecdotally that there has been an increase in severe individual claims settlements across both our Lawyers and A&E clients, with several in excess of $100 million affecting Law firms.


These classes have experienced significant claims, as the #Metoo movement has given plaintiff a much higher degree of confidence to pursue large settlements. As a result, settlement amounts have increased in multiples. Many professional services firms have suffered huge losses, be they gender-related or one-off cases.


Since the beginning of the pandemic, we have seen a significant uptick in Ransomware claims. This has affected professional service firms as much as commercial firms. On our account alone, we are aware of five losses that on an individual basis have settled for in excess of $2 million in the past six months. The move to Working from Home and the increased use of tablets and smart phones continues to test the most secure IT systems and provide greater opportunities for hackers.


In what is viewed as a positive rating environment, Lloyd’s has announced an overall capacity increase of 8.9% to approximately $48 billion, with most syndicates being granted an increase, some of which will be allocated to US Professional Liability business. This means that most Lloyd’s syndicates have the approval of Lloyd’s and their own syndicate management to underwrite more business, on both a new and a renewal basis.

Mosaic (Lloyd’s)

Later this year, hopefully at the beginning of the second quarter, Mark Wheeler, previously CEO of Ironshore Europe and subsequently Hamilton Managing Agency, will return to the Lloyd’s market with a new Syndicate 1609, Mosaic. While we have not seen his business plan, we expect him to provide further US Professional Liability capacity and to lead risks in specialist sectors.

Interestingly, several of the well-known Professional Liability senior underwriting executives from Hamilton have also recently resigned. We anticipate that they are likely to be joining Mosaic in due course.

Convex (London Company)

Following her decade-long tenure at Beazley underwriting Law firms and Architects and Engineers Professional Liability, Jana Ratnajothy started at Convex in January 2021. This London-based organisation was recently formed by a London market veteran, Stephen Catlin, and Jana’s role will be Head of the Professional Liability Division, focusing on this class of risk.

Whilst this is a very new role for Jana, she has developed a business plan and the recruitment to build her Professional Liability underwriting team is progressing well. Jana is actively underwriting and is now available for prospect meetings.

Arcadian (Bermuda Company)

After many years at Markel, Joey O’Dea and Sally Gibson resigned in the 4th quarter of 2020 and, as of January 2021, have started at Arcadian. This is a new MGA start-up using Third Point Reinsurance Company and will operate out of Dublin and Bermuda. We understand that Joey and Sally will have a similar appetite for the risks they previously wrote at Markel and are available to meet and underwrite prospective clients.

This new capacity entering the market will not be burdened by claims legacy, and whilst they will be wanting to ride the premium upswing of the hardened market, they will not be under the same internal management pressure to be so aggressive in their rate aspirations. We will be looking for every competitive advantage from the new capacity in order to counter the more aggressive rate ambitions of the incumbent carriers.


On occasion, we have observed insurers attempting to underwrite generically, using their broad opinion of a portfolio of business. This is lazy, indiscriminate underwriting. Working with our retail partners, we will challenge this approach relentlessly.

  • The key will be even earlier planning and preparation, focusing on differentiating specific risks. We will continue to help our retailers counsel their clients and prospects to ensure they show themselves in the best light possible.
  • We will advocate for these risks to ensure the markets recognise and acknowledge these factors in their terms and conditions.
  • In a difficult market, we will continue to recommend insurer/client meetings, albeit over Zoom/WebEx. These meetings have worked effectively and continue to provide clients with an opportunity to positively communicate messages not easily conveyed within an application form.


The London and European Professional Liability insurance environment will continue to be challenging for US risks in 2021. However, new underwriting appetites are evolving, alongside existing incumbent markets. We will continue to assist retailers and their clients to navigate this unique marketplace, as it plays an important global role as an alternative and/or partner to the US markets.


Nick Lewin

Partner & Director


D:  +44 (0)207 280 8231

M: +44 (0)797 980 4749