Let’s explore three key insurance predictions and what they might mean for your firm.
1. HEALTH INSURANCE
My first less-than-bold prediction is that something will happen in a huge way in 2017 regarding the Affordable Care Act (ACA). While the implementation of any changes or repeals may not all happen this year, it is likely that there will be changes in the regulatory and plan design environment. So what can you do about it?
Dig deep into your data. Get as much information as you can about how your firm employees use health care. Depending on the size of your firm, you can get some information from your current insurer, but most firms will need to create their own data set. Lots of experienced health brokers can help you with that process. Then, you will be in a much better position to evaluate the options from insurers and other vendors (health reimbursement accounts, health savings accounts, etc.).
Evaluate your team. Some brokers and insurance agents are too small to always be up-to-date rules and regulations regarding your options and benefit rules. It’s a good time to re-interview them to determine if they are ready for 2017 changes.
Engage benefits technology. Human resource tools have come a long way to help you organize and roll out your plans. From open enrollment to timely communication, these HR tools will help you quickly react, comply and communicate changes with your firm employees.
2. PROFESSIONAL LIABILITY INSURANCE
In most states, competition continues to drive down premiums. Even in states where some insurance companies are leaving completely or becoming very selective about which firms they insure, the market still remains very competitive.
So what can you do about it?
Start early. It sounds so simple, yet firms often don’t prioritize getting the application done early. There is no immediate tangible consequence to delaying the completion of the application. Rule of thumb: 60 days prior to expiration, send it to your broker for review; 45 days prior to expiration, the final version of the application should be sent out to the insurance companies for the shopping process.
Explore more coverage. Excess coverage (defined as amounts of coverage above $2 million) is particularly inexpensive compared to past years’ pricing. When evaluating the excess options, your broker should evaluate increasing the amount of coverage with your primary company compared with a standalone excess policy.
Some primary insurance companies will offer embedded higher limits, and other primary insurance companies are better priced only for the primary layer — in which case a standalone excess policy will make more sense.
3. CYBER COMPLIANCE AND CYBER INSURANCE
Demands from clients for cyber indemnity, insurance and infrastructure will grow exponentially in the coming year. Your clients are overwhelmed by regulatory demands and the fear of being the next Target (pun intended). They will continue to push the liability downstream to their vendors — and to their law firms, too — by obtaining contractual indemnification from your firms, requiring you to complete technology and procedure audits and specify that you must buy a cyber liability insurance policy.
So what can you do about it?
Get ahead of the request. Start evaluating a cyber liability insurance policy before you actually need one. Scrambling to put a policy in place when a new engagement requires one is not a good plan of action. It can take up to two weeks to apply and implement a full-blown cyber policy, so plan ahead.
Catch up to your clients’ technology. Make sure that your IT defenses and systems are up-to-date. There are now many companies that provide affordable assessments and are experienced with law firm environments.
Have one of your partners become an expert in this new practice area. The first benefit is that they can be a key resource to you in your firm policies. Second, all companies are grappling with these issues, so being an expert in a hot and growing area of law will be rewarding.
While no one has a crystal ball, start your year off right by prioritizing these three key areas for focus in 2017.