Insurance Marketplace Realities 2026 – Errors and Omissions

Rate predictions: Errors and omissions

	Trend	Range
Large law firms		-2% to +3%
Small to mid-size law firms		-5% to flat
Management consulting firms		-5% to +10%

Key takeaway

While some primary insurers are still trying to impose claims inflation increase of 2% to 3%, primary policy rate increases for large law firms have mostly leveled off with reductions possible because primary insurers have reached rate adequacy after five years of annual rate increases. Excess insurers continue to resist significant premium decreases due to continuing claim severity and rapid settlement time.

Lawyers

• The severity of LPL claims continues to be an issue, as more claims are exceeding the primary and going into the excess layers, sometimes as much as $100 million or more.
• Primary underwriters have corrected pricing to reflect claims severity, while excess insurers are still in the rate correction process and resisting significant premium reductions.
• As the use of AI by lawyers increases, there are concerns with oversight and compliance with professional ethical standards and making sure there are tight controls over AI selection and use to ensure accuracy. Underwriters are also focused on the following:
  • Training/supervision
  • Significant lateral movement with respect to lateral selection, integration and cultural dilution
  • The financial stability of law firms
  • Law firms working with entities in sanctioned countries
  • Ensuring that there are redundancies are in place if law firms are faced with a cybersecurity incident
• As the market is stable and capacity remains steady, most primary carriers have reached rate adequacy and are moderating their premium targets based on underwriting criteria.

Consulting firms 

• Underwriters have continued concerns over consultants working with clients in the tobacco and opioid industries and potentially crossing the line into proposing or operationally supporting high-risk strategies for regulated or high-risk products.
• High-profile claims against consultants have generated additional levels of underwriting scrutiny for consultants providing these types of services.
• Underwriters are still evaluating insureds that work with sanctioned entities and confirming that they have plans in place to address these situations.
• Competition has resulted in lower premium increases for high-risk practice areas and for consultants with solid risk management procedures and low-risk practices.
• Underwriters continue to focus on:
• Cyber controls
• Practice areas: Turnaround management, cryptocurrency and pharmaceuticals continue to be considered high-hazard. Above a specific percentage, firms focusing on actuarial consulting struggle to find capacity.
• Financials: Clients have become more demanding and are pushing back against concepts like billable hours and seeking cost transparency.
• Strategic plans to address the evolution away from clients having to rely on consultants’ specialized knowledge, i.e., the Googleization of expertise
• Appropriate licenses being in place when insureds work with sanctioned governments
• Controls over the use of AI

Contacts

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Geoffrey Allen

Head of Professional Services Practice

email Email phone +1 818 915 4311

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Jason D. Krauss

Cyber/ E&O Thought & Product Coverage Leader, FINEX North America

email Email phone +1 212 915 8374

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