Run for Coverage Commercial liability insurance trends.

• Author: Barbour, Tracy

Liability insurance is like a blanket that keeps out the chilly drafts of lawsuits for bodily injury or property damage. The types of claims are changing in the days of COVID-19, leading to a growing demand for liability insurance, which leads in turn to rising rates and policies with fewer bells and whistles. The elevated costs and more restrictive coverages in Alaska indicate a hardening market, according to experts. However, Alaska businesses can implement strategies to better position themselves to navigate the evolving landscape of liability issues.

Paying More to Fewer Carriers

Many companies that write policies in the Lower 48 opt not to do so in Alaska, in part because of the state's sparse population. That translates into less competition--and fewer insurance market options for Alaska businesses.

"With the market hardening, there's been a pull out of a number of carriers: Scottsdale ended its auto dealer's policy and Philadelphia quit writing its business owner's policy," explains Christopher Pobieglo, president of Business Insurance Associates, an independent agency that sells a full spectrum of risk management products. "In some cases, if you get a really niche industry, you might have only one or two insurance companies to go to here. The used auto dealers in Alaska only have a few insurance companies that write that."

Pobieglo says the market began hardening a year or two ago; it had been a soft market before then for about fifteen to eighteen years. "A lot of businesses have only known a soft market, so they're used to getting their renewals and prices dropping," he says. "Now the insurance companies are asking a lot more questions; they may ask for more supplemental information." For example, some companies have an infectious disease supplement that queries businesses about their COVID-19 policy. Other insurance carriers are asking clients to disclose situations ahead of time and may not cover exposures that have not been disclosed.

In addition to raising premiums, Pobieglo says carriers are requiring higher deductibles to make insured parties put more skin in the game.

Higher pricing is mainly in the property, auto, and excess lines of coverage, says Matt Thon, an Anchoragebased account executive at risk management and brokerage firm Parker, Smith & Feek. "General liability, for the most part, has been pretty stable," he says. "Claim frequency is fairly stable."

PLI and D&O

One of the more visible shifts is the increased...