TV

Paul Lucas  00:00:02
Hello everyone. Welcome to the latest edition of Insurance Business TV, as we look at the E&O and miscellaneous Professional Liability market. Now in this edition, we welcome Dan Mogelnicki. He is SVP and Professional Liability Product Leader at Westfield Specialty. Dan, welcome to IBTV. 
 

Dan Mogelnicki  00:00:20
Thanks for having me, Paul. I'm really glad to be here to be able to speak to this great audience.
 

Paul Lucas  00:00:26
So Dan, you're an expert in this space. Give us your overview of the state of the E&O and MPL market.
 

Dan Mogelnicki  00:00:33
Yeah. Well, in a word, it's it's crowded. There's well over 60 markets that compete. This includes carriers who've been doing it for a long time, decades, in fact, but to a significant level, and more recently, there's a lot of startup companies and mgas. So it is crowded, and the professional services economy is huge, though literally trillions of dollars of GDP, and it continues to grow. So there's plenty of opportunity, even with such a large number of companies. What is evident is that as the market has matured, there has been a simplification of the underwriting process all geared towards the SME, you know, small to medium enterprise market, and the newer competitors trying to capitalize on that, some with versions of insured tech solutions, sort of a cookie cutter approach, from a lot. From a loss standpoint, overall, loss trends are currently stable, but you know, in pockets there have been, it's been affected by some emerging exposures, like the rest of the industry, social inflation, some troublesome venues and economic trends. Fact, this class is significantly negatively influenced by downturns in the economy, but right now, overall, it remains stable and strong.
 

Paul Lucas  00:02:01
Well, you spoke about a market maturing there. Dan, dare I say you've matured a little bit in this role yourself. You have nearly 40 years of experience. What trends have stood out for you along the way, and indeed, are you seeing anything new now?
 

Dan Mogelnicki  00:02:15
Yeah, thanks for bringing up my longevity. Paul, indeed, it has been decades. Yeah, you know, I've seen this segment basically through its birth up to the current state of maturity. I can remember when the Insurance Services Office first developed the Professional Liability exclusion that attached the GL policy that was endorsed with GL 2116 I was after the PC industry recognized what like the economy was changing. It went from a manufacturing based economy to that of a knowledge based economy. And the standard GL form, which covers bodily injury and property damage, wasn't suited to address the unique exposures that were developing. So, you know, professional liability essence is defined as errors or emissions in the provision of professional services, the losses are pecuniary, rather than physical. Along with this growth in this portion of the economy and carriers stepping up to fill the void came the development of specialization. But you know, not only in the underwriting but also along the distribution chain, the wholesale market, in fact, has the has the greatest concentration of specialized personnel diverted to the devoted to the class. And you know why larger retailers may have some dedicated practices within the firm. This is the exception, not the rule, in terms of what's new. You know, I mentioned growth in the cookie cutter approach, the designing of that box within the risk might fit. That's one. Also the professional services industry itself is going through a period of consolidation, a lot of m and A's also there's like unrelated entities that are adding professional services divisions to their operations, and that's something that we're seeing frequently.
 

Paul Lucas  00:04:13
Tell us a little bit about Westfield Specialty as well, and in particular, why it would choose to focus on MPL at this point in time.
 

Dan Mogelnicki  00:04:23
Yeah. Well, you know, as a part of a stable and financially sound 177 year old company, older than me, in fact, that being Westfield Insurance, Westfield Specialty has had tremendous success in the less than four years of its existence. In that short span, we've grown domestically and internationally to over one and a half billion dollars of GWP in the specialty lines, includes management, liability, financial institutions, excess casualty, specialty, property, environmental. Cyber some others, but I find it ironic, but also an opportunity that we have not made a huge mark on one of the most mature specialty lines, MPL, and that's what we're currently doing. Paul, you know there also there's a close alignment of MPL with cyber, and we have a very robust, viable cyber practice. And since many of the distribution partners that specialize in cyber also have an expertise in MPL, we're going to capitalize on that. And as I mentioned, the class itself performs well, some segments better than others, but on the whole, very profitable. So we intend to utilize our internal expertise, be it underwriting claims, handling our distribution, in order to attract and build a superior, performing MPL book of business.
 

Paul Lucas  00:05:56
Now you sort of referenced it a little bit. You spoke about the different classes of MPL, they can, of course, be massive. Are there any specific opportunities you're looking for, and indeed, why?
 

Dan Mogelnicki  00:06:10
Yeah, you're absolutely right. Massive. Indeed. We've identified more than 200 classes that can be considered miscellaneous. We'll talk, we'll talk about a few of them in a moment. But, you know, I prefer to kind of answer the question regarding opportunities in terms of our distribution. So first, we collaborate with those producers who demonstrate a proficiency in the professional liability lines and who have the business. You know, then this, this is going to mean foregoing those one off producers who may have an account or two, and in doing so, we will also enter into specific relationships with some of those with white labeled policy forms and specified service level agreements. Additionally, we're going to utilize our expertise in handling challenging or unique exposure, such as well risks with multiple professional services, to name one for for example, consultants that advise on multiple things. So they'll counsel on real estate and business practices and benefit plan consulting, maybe others, and that's just too complicated for that cookie cutter approach. Or another example could be a risk, and this happens quite a bit where it seems like a financial institutions account, but the financial institutions underwriter says, ah, not really. It's not directly us. It belongs to MPL. And a typical MPL, MPL underwriter says, oh, that's got a financial institutions tinged to it, and it belongs with them. Well, we're going to be a solution for that type of a problem, or any other type of problem that that that can arise. Additionally, I talked about that cookie cutter approach, that the existence of that approach will inevitably lead to risks falling outside of those boxes, and we're going to be there to catch those, and we're going to be a solution for those as well. Now we're also going to do those ESG cookie cutter, cookie cutter exposures, and would expect to enjoy the benefit of of having provided a solution for the tougher stuff, giving us better access to those easier risks as well. So also, we fully intend on offering our existing combinations, see a cyber and MPL form. We've had it for a while, and we'll we'll offer that where that is needed and desired. Then from a class standpoint, getting back to the class question, we're really going to be open to almost that, almost everything, a couple that I can think we won't do would be actuaries and seeds men, some of the risks that traditionally have been on the exceptionally tougher end. But we have an open mind, totally open mind, and we're going to go where the business is, where the need is. We want to be there to fulfill the needs. We think consultants. And there's about 50 or 60 different types of consultants that are on our list, real estate professionals, business process outsourcing, trustees, some others present the bigger opportunities. 
 

Paul Lucas  00:09:31
What's interesting to hear you talk about that cookie cutter if you want standard and the opportunities that are going to fall outside of that? I'm sure there are brokers watching who will be eager to seize on some of those opportunities as well. So do you have any tips for any brokers operating in the MPL space, particularly as it relates to 2025?
 

Dan Mogelnicki  00:09:53
Yeah, I guess. I guess I do. You know this line of business is all about. Expertise. Not every broker has this stuff. And by the way, this advice, you know, for those out there who already have the expertise they don't need, they don't need any tips for me, so this advice is really meant to go towards all those brokers who only dabble my tip, my advice, Don't dabble. You've got a choice to make. Either develop the internal expertise yourself, and if you do the business, will come or go to the experts who know this class well. You you do yourself and your insurance a big favor by doing either one of those.
 

Paul Lucas  00:10:46
Excellent stuff. Great tips. I'm sure there are many brokers who are very wary of dabbling now, and we'll turn to an expert like yourself. Dan, great to have you with us. Remember that If you want insights from more experts just like Dan, well, keep it right here and Insurance Business, TV.