New Woodruff Sawyer General Partnership Liability (GPL) Guide Highlights Rising Regulatory Pressure and Competitive Insurance Pricing for 2025
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SAN FRANCISCO, Oct. 29, 2024 ~ Woodruff Sawyer, a leading independent insurance broker in the United States, has recently unveiled its first-ever GPL Looking Ahead Guide for 2025. This comprehensive guide is specifically designed for the Private Equity and Venture Capital community and highlights the key trends that will shape the General Partnership Liability (GPL) market in the coming years. These trends include a rise in claims activity, regulatory changes, and competitive pricing, all of which will set the tone for Q4 of 2024 and beyond.

The Guide is now available for download and interested parties can also attend a webinar on October 30 to learn more about its findings. One of the major trends highlighted in the Guide is the increasing legal costs and regulatory scrutiny faced by asset managers. As they seek top-tier counsel for regulatory matters, they are facing higher legal fees which could potentially create gaps in their coverage. Additionally, evolving regulations from the Securities and Exchange Commission (SEC), such as the Private Fund Adviser Rules and amendments to Regulation S-P, have increased compliance risks, particularly in areas like cybersecurity and anti-money laundering (AML).

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Despite these challenges, there is some good news for firms without significant claims. The increased capacity among insurers has led to a decrease of 0-20% in premiums. However, this may not be true for firms with portfolio company-related claims or heavy debt exposure as underwriters are expected to tighten their underwriting standards for these types of risks in 2025.

Another important aspect highlighted in the Guide is the focus on regulatory investigation coverage. Brokers are currently able to secure broad coverage during this soft market period, including provisions for informal investigations. This is especially beneficial given the SEC's increased scrutiny of portfolio companies. However, if investigation-related losses continue to rise, insurers may reconsider offering such broad coverage.

The Guide also sheds light on specific areas of concern within GPL such as Outside Directorship Liability (ODL), Employment Practices Liability (EPL), and Regulatory Inquiries. Directors on portfolio company boards are facing growing legal exposure, while disputes such as wrongful termination and carried interest claims present unique challenges for firms. Regulatory inquiries, although infrequent, are high-risk and expensive, requiring close coordination between legal and insurance teams.

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To navigate these complex challenges, Woodruff Sawyer emphasizes the need for tailored GPL programs. With over 2,000 historical claims data at their disposal, the firm helps clients align their coverage with evolving risks. As competition among insurers continues to rise, VC and PE firms can negotiate favorable terms by proactively managing their risk profiles.

Luke Parsons, the National Private Equity & Venture Capital Practice Group Leader at Woodruff Sawyer, stated that the General Partnership Liability Looking Ahead Guide was developed to address the complex challenges faced by their clients. He also highlighted the firm's three-decade-long partnership with innovative venture capital and private equity firms, providing them with expertise and advocacy to secure optimal coverage, pricing, and claims outcomes. With a team of over 40 specialists and a comprehensive platform, Woodruff Sawyer empowers clients of all sizes to navigate the ever-evolving insurance landscape through deep industry insights, benchmarking, and relentless advocacy.
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