Palisade adds Accredited E&S capacity to boost contingent legal risk capacity to $35 million

By David Bull

June 30 - (The Insurer) – Palisade Insurance Partners has added capacity from Accredited Specialty Insurance Company (ASIC) as it aims to meet “strong demand” for coverage of contingent legal risks at a time when the segment has seen retrenchment from a number of carriers stung by recent losses.

In a statement confirming the tie-up, the MGU said ASIC – the E&S platform for hybrid fronting carrier Accredited – will provide its insurance capacity on a delegated authority basis for Palisade to underwrite contingent legal risk insurance products.

The addition to its carrier panel means that New York-based Palisade can now offer up to $35 million of insurance limits for any one risk.

Sources with knowledge of the segment said that there has been a shift in the last couple of years away from judgment protection insurance deals that had represented a major part of the market, following a series of sizable losses.

This led to a number of non-specialist participants in the space pulling back or exiting altogether, leaving only a handful of players willing to insure litigation and other contingent risks for law firms.

Palisade is one of a small number of MGAs now operating in a segment which has moved away from writing judgment protection, or preservation deals.

In addition to Palisade, they include transactional liability specialist Vale Insurance Partners; Ignite Specialty Risk, which operates on the Mission Underwriting Managers platform; Litica, and others.

In its statement, Palisade, which specialises in writing litigation-related insurance, other contingent risks and transactional insurance, said the MGU is seeking to meet growing demand from corporations, law firms and asset management funds as well as counterparties in M&A transactions.

It added that it can address risks on both the plaintiff and defendant side of litigation, with its products addressing risks and exposures relating to both legal assets and liabilities.

FOCUS ON INSURING PORTFOLIOS OF RISK

Speaking to E&S Insurer, Palisade’s founding president John McNally said the firm has a focus on insurance portfolios of risk, rather than individual cases.

“We see it as an industry that’s going to grow, and those portfolio risks expand beyond what’s being done now and move into more corporations getting involved,” he commented.

He added that underwriters are looking for there to be more alignment of interest between the insured and insurers.

“We think it’s a market that’s on its way bac up. We’re seeing a lot more volume of opportunities and we think we’ve got a model of underwriting where we’re looking to reduce volatility in terms of the risks we’re taking and write things that we think are more sustainable,” McNally said.

In the statement, the executive said that the needs of corporate clients, law firms, asset managers, and others for insurance solutions to mitigate and manage contingent legal risks “has far outgrown available market capacity and capability”.

His colleague Scott Stevenson, head of US risk for Palisade, added: “For context, the global legal services industry now exceeds $1 trillion in annual fee revenue – the momentum in other areas of legal services and legal risk management has far outpaced the development of the insurance market in this area, creating a strong demand for insurance capacity covering these risks.”

Accredited president Grace Meek said that partnership expands the fronting carrier’s presence in the contingent legal risk insurance market.

“Palisade’s strong underwriting capabilities and sharp market perspective align with Accredited’s commitment to empowering high-potential program administrators with the scale, stability, and strategic support they need to thrive,” she said.

Although the business in the U.S. is typically written on a surplus lines basis, it tends to be distributed through retail brokers with specialist capabilities in the space, including CAC, Alliant and WTW.

Despite the move away from some of the large judgment protection deals, the biggest placements still tend to require in excess of $100 million of total limits, which can require the majority of available capacity in the sub-segment to be deployed.