A press release today by OneBeacon Insurance Company confirms the rumor that they are exiting the lawyer’s professional liability space at the end of 2014. Over the past several years OneBeacon Professional Insurance has exited out of real estate brokers and small law firms. This move completes their exit from the large firm and non-standard lawyer market.
The memorandum released the afternoon of December 16th announced the sale of at least $30M of premium renewal rights to Argo Group. In a standard renewal rights transaction the buyer would carefully re-underwrite the book, choosing which accounts to offer renewal terms to and which to non-renew. In certain states the seller may be forced to offer renewal terms to accounts the buyer does not want.
Prior to the sale OneBeacon wrote law firms with more than 10 attorneys and offered up to $10M in limits. Argo wrote groups with under 40 lawyers and only had $5M in capacity. The sale ends a rumored unprofitable venture for OneBeacon and gives Argo quick scale in the large firm market. Argo’s US president Kevin Rehnberg had previously worked at OneBeacon with the professional liability team, several members of which will join Argo under the deal.
The market for legal malpractice insurance continues to be volatile, especially for smaller firms. Very few companies are taking the approach of Argo and looking to expand their presence in the market. However, Argo’s push appears to be in the market for larger firms which have shown a more stable loss profile in recent years.
This deal may impact a firm currently insured with One Beacon in multiple ways. Primarily, it remains to be seen whether Argo will honor the limits and retentions allowed by OneBeacon. The underwriting Argo performs may lead to changes in the limit profile of some firms, leading to the need for these larger law firms to find excess insurance. Firms may also wish to be more diligent with their renewal this year as well. Rather than being blindsided by a premium increase or coverage decrease and having to take it, firms should be proactive about working with a broker who will obtain multiple options on their behalf.
Small firms continue to receive non-renewal notices as carriers flee the market. Working with an expert legal professional liability insurance broker will ensure the best deal possible for your firm. The competitive market should continue into 2015 but the number of underwriters leaving the market threatens to turn things around.