August 2004 NEWSLETTER to clients of Knox Insurance Brokers Ltd. From: Randy Bushey, AIIC General Manager	Close newsletter
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TOPIC: Observations on Liability Coverages

At Knox Insurance, we act as observer of the insurance industry on behalf of our clients. As part of understanding your Total Cost of Risk, we provide marketplace context for what is happening in Canada, and around the world.

Throughout 2002 and 2003, underwriters were demanding much larger premiums together with significantly restrictive terms; as a result, our clients were consistently paying, and getting less coverage in return.

We are now seeing a moderating of that trend as it relates to many classes of liability coverage. Whereas liability premium increases in the range of 20% to 30% were considered "normal" in the last two years, we are now generally seeing rate increases in the 5% to 15% range. However, accounts with claims or ongoing litigation activity in the last five years, or in the following classes continue to attract more unpredictable pricing increases:

► Medical Malpractice

► Municipal Liability

► Environmental Impairment Liability

► U S Products Liability

► Directors & Officers Liability

Liability underwriters around the world continue to be concerned with the direction of "social justice" decisions in North American courts, and the propensity for plaintiffs counsel to enlarge the list of defendants. This creates more situations where the policy’s "duty to defend" provisions are triggered, meaning that our client’s policy pays defence costs even when our insured is ultimately released from the action.

We are monitoring the marketplace on a daily basis, reviewing pricing and coverage trends within the primary insurance, and re-insurance markets. The move back towards financial stability for the liability insurance sector as confirmed by the rating agencies (A.M. Best, Moody’s, Standard and Poor’s), indicates likely future pricing predictability.

We will continue to monitor and advise, assisting you in reducing your Total Cost of Risk.