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Customer demand, emerging risks spur management liability market growth

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NEW YORK — Increasing customer demands and emerging risks are driving changes in the private company and nonprofit management liability market, according to Christopher Sparro, American International Group Inc.'s president of financial lines for the U.S. and Canada.

Mr. Sparro, who spoke Wednesday at Advisen Ltd.'s Management Liability Insights Conference in New York, said private companies and nonprofits are now seeking greater and more sophisticated coverage packages akin to those being sought by large, public companies.

Nonprofits and private companies want packaged forms that include additional lines such as cyber coverage and kidnap and ransom cover, in addition to directors and officers coverage and employment practices liability, said Mr. Sparro.

“Cyber will become an integral part of the program, like D&O and EPLI,” he said, adding that there is also “a need and a requirement for more limits.”

Insurers also must turn their attention to smaller businesses in a market where the focus has traditionally been on large national accounts.

There is a finite amount of larger accounts, meaning there may be more opportunity to win new business among a far larger group of small businesses, said Mr. Sparro.

“It is the biggest space,” he said. “Small business is big business.”

In an age when information flow and sources are growing continually, the insurance industry has some catching up to do, Mr. Sparro said. The insurance industry has always been behind in technology because business was based on face-to-face relationships, he said.

“But even in the insurance industry, we have to continue to move forward,” he said.

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Insurers must develop new tools such as directors and officers applications or webinars aimed as loss control, services for which customers appear to be clamoring.

“The ability to gain information is now more critical in selecting a carrier,” he said.

While the space for private companies and nonprofits is becoming more complex and demanding for carriers, Mr. Sparro said he does see an opportunity for growth for those willing to respond to new customer challenges.

“Ten years ago, private/nonprofit was viewed as a simple space. Today, some still see it this way, but it is not. It is a complicated book,” said Mr. Sparro.