The of professional liability insurance market for accountants has become "hard" with increases in rates and in the scrutiny that insurance carriers are placing on the business they write.
"There’s no question that the whole market is firming up and underwriters are more cautious about the types of coverage they provide and in evaluating risks," said Sean Sweeney, a marketing executive with Philadelphia Insurance Cos. of Bala Cynwyd, Pa.
Malpractice insurance rates for accountants are expected to increase across the board, with the steepest hikes to be applied to audit-related exposures. The only insurer to deny that its rates will rise -- Redwood City, Calif.-based Camico -- acknowledged that pressure is on for an increase.
Additionally, insurers are paying much closer attention to writing policies, particularly ones covering audit work. "Anything that involves public audit, regardless of size, is getting extra scrutiny," said James Eisenmann, president of Chicago-based Aon Risk Services, which administers the professional liability insurance program endorsed by the American Institute of CPAs.
Hard insurance markets also typically feature insurers withdrawing from markets and few, if any, entering. Only one new insurer entered the accountants’ professional liability market in the past year -- Chubb Group of Insurance Cos. of Warren, N.J., one of the world’s largest insurers, with $7.8 billion in assets in the United States alone
While several withdrew from the accountant’s malpractice market between 1998 and 2000, the only one to exit in the past year was Westport Insurance Cos. Its book of business was acquired by Philadelphia Insurance Cos.
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