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Over the last week I have had the same conversation with three clients: an insurtech with an embedded auto product, a massive MGA putting half a billion dollars a year into the market, and a newer MGA writing monoline environmental for a major US carrier.

Different books, same problem. A claim comes in against the errors and omissions policy. Months later the argument has moved to what management knew and when, which pulls the directors and officers tower in behind it. Two carriers, each pointing at the other while the clock runs. I told all three the same thing. Fixing the seam between those covers is the most important part of their program.

It's not just me, in late July, two management liability leaders at Intact published the same pattern in Insurance Journal.

In this week's Edition:

• Two Intact management liability leaders name the three files that keep crossing towers. The exclusion that decides which of your policies pays is on many forms already.
• Twenty insurance companies went on the record about what they buy for themselves. When they rank what they want from the carrier above them, price comes fourth.
• The disclosure fight over litigation funding did not wait for Congress. It is already sitting in a form endorsement, and a major funder says it will not hold up.

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1. The Claim That Does Not Fit One Policy

Two management liability leaders just described the file that breaks the filing system.

Karli Moore is a senior claims manager in management liability at Intact Insurance Specialty Solutions. Lauren Engnell is its director of management liability. Writing in Insurance Journal on July 27, they laid out what they see from that desk. We place business with Intact, so read the praise accordingly. The coverage read that follows is ours, not theirs.

A service error surfaces. Then come the questions about who approved the process, what leadership knew, and when. The professional liability matter becomes a management liability matter. Nobody planned the handoff.

They name three versions of it. A workplace complaint grows into a leadership review. A data incident turns into a disclosure question. A business decision draws fire over who it harmed. Three starting points, same ending. The argument is structural, not anecdotal, and algorithmic underwriting will make it worse rather than better.

Buy four separate programs, and one event can reach several of them, even if only one ends up paying.

(source: Insurance Journal, July 27, 2026; Allianz Commercial, D&O Insurance Insights 2026)

So what?

You bought the program in four pieces. You will be tested on it in one.

Standalone programs are a deliberate choice, and sometimes the right one. But the seams they create are what need to be shored up. (Dovetailed, as we say in the industry!) Allianz puts non-attack incidents, meaning wrongful data handling, technical failure, and outages, at a record 28% of large cyber claims by value in 2024. Same seam, other side.

The first break is usually in the wording, not the limit. Many private company directors and officers forms carry a broad professional services exclusion, and the carve-backs are too narrow for the claim as pleaded. Both carriers then have grounds to say the other should answer first. The delay and the defense spend are yours. Worse, the claim gets reported where it first presents. If it migrates, the second carrier's late-notice defense lands before anyone reaches the exclusion.

Four for your renewal list:

• Seam mechanics. Notice every implicated program on day one, and ask for priority-of-payment wording that sets the order of response.
• Management liability. Test the professional services exclusion against negligent-supervision, failure-of-oversight, and disclosure allegations.
• Errors and omissions. Test the contractual liability exclusion, the insured-capacity wording, and the professional services definition together. Embedded and platform programs need it to reach the technology and the distribution, not only the underwriting.
• Side A. Confirm a dedicated layer, not only the Side A inside the main policy.

One carrier can lead all four sections. One retention instead of two, and one limit instead of two. That is the trade in our Lloyd's manuscript, and here is why we made it.

A short limit is always a problem. On a disputed claim, though, the first and least visible failure is the space between two policies, and it runs while the claim does.

We run that walk-through with clients: one incident, traced end to end, wordings open on the table. It almost always turns up a seam nobody had priced. Reply if that would help before your renewal.

So how do the carriers themselves buy against that?

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2. What Twenty Insurance Companies Buy for Themselves

Insurance companies buy insurance too. Outside the largest, they have had almost nothing to compare it against.

Demotech and LION released our joint survey. It runs in The Demotech Difference (Summer 2026, pages 34-35 and 50) and crossed the wire yesterday. We asked twenty US property and casualty insurers how they handle their own risk transfer. Not what they sell. What they buy, what they retain, and how they pick the carrier above them.

What they reported: nineteen of the twenty carry directors and officers cover for their own board. Eighteen carry insurance company professional liability, the policy that answers when a carrier is sued over its own underwriting or claims handling. Eighteen carry cyber. Eighteen write under $100 million in gross written premium, half between $10 million and $50 million, and most run state or regional books.

The counts overlap. At least seventeen carry both directors and officers and cyber. At least fifteen carry all three. That is arithmetic on the totals, not a question we asked.

What it is not: twenty self-selected respondents, with an optional incentive for those who named their firm, fielded in late 2025. It is a first baseline for a segment that never had one, not a representative benchmark, and it does not reach MGAs, program administrators, or the largest national writers.

Read what follows as what twenty peers reported, not what the industry does.

The LION Lens

What happened: Twenty regional and specialty insurers put their own buying on the record for the first time. Three towers, bought on their own balance sheet rather than sold to someone else's (source: The Demotech Difference, Summer 2026, pages 34-35).

Why it matters: This is the first look most of them get at how a true peer builds the same three towers.

Practical implications: Respondents ranked what they want from the carrier above them. Financial stability first, then claims handling, coverage breadth, pricing consistency, and underwriting expertise last. Carry that ranking into your own renewal, then test whether your three towers answer one event in one voice.

So what?

A $30 million mutual has never had a way to answer the simplest question about its own insurance. Is this normal?

Benchmarking has only ever run one direction in this business. Carriers hold the data. They price with it, they reserve with it, and they hand peer comparisons to their own insureds as a service. On their own corporate cover, those same carriers buy blind. What retention is normal at our premium volume? Is our cyber number reasonable, or are we just used to it? The honest answer has been to ask a broker and hope that broker had seen enough accounts to know.

What they told us:

• Pricing. Closer scrutiny of rate adequacy in directors and officers and professional liability, with MGAs and fronting carriers pushing prices down on smaller accounts.
• Cyber runs the other way. Retentions keep climbing, tied to capacity and tighter underwriting.
• Terms. Tighter exclusions and higher attachment points, again concentrated in cyber.

We and Demotech called it a cautious equilibrium: competition bites where the accounts are leanest, capacity stays disciplined everywhere else.

The LION POV

Here is how we are advising clients, informed by the survey but drawn from our own book:

• Start with which covers you carry, not what you pay. If you are missing one of the three, that should be a decision you made, not one you inherited.
• Make the retention a decision, not an inheritance. Most programs carry last year's number because nobody had a reason to move it. Decide what you will keep, then buy above it.
• Buy the claims department, not only the limit. Respondents ranked claims handling above coverage breadth and above price. They watch how the money actually gets paid.
• Cyber is where the retention moved, so bring the controls story. Respondents tied rising retentions to capacity and tighter underwriting, not their own loss experience. So the negotiation left is on terms, and it runs through multi-factor authentication, endpoint detection and response, and network segmentation.

Twenty is a small sample. It is also the first time this segment of the market has been able to see itself. Demotech spent four decades doing that for ratings, for insurers the majors would not rate.

Send us your structure and we will mark it up. Against the twenty on which covers they carry and how they pick a carrier, and against our own book on limits, retentions, and pricing. You ought to know where you stand whether or not you change a thing.

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3. Litigation Funding Disclosure Moved Into the Wording

The fight over litigation funding stopped waiting for Congress.

ISO added a condition to its liability forms this year. The Litigation Funding Mutual Disclosure endorsement, form CG 99 11 01 26, took effect with the January 2026 edition. It is optional, and that is the first question for your renewal: is it on your program, or not?

Where a carrier attaches it, either side can demand to see any outside funding deal behind a claim or suit. The other party has 30 days to produce the agreements, name the funders, and spell out what control they hold. Compliance is a condition of coverage.

One limit. The condition runs between insurer and insured. It will not tell you whether the plaintiff suing you is funded, only whether your own insured has funding arrangements. Funder Omni Bridgeway argued in public on January 27, 2026 that the condition will not hold up. No court has tested that, so treat it as open. But when a major funder answers an optional endorsement in public, both sides of the table are taking it seriously.

Policy wording got there ahead of everyone, and it got there quietly.

(sources: Hunton on ISO form CG 99 11 01 26; Omni Bridgeway, Jan. 27, 2026; S. 3826; Marathon Strategies, Corporate Verdicts Go Thermonuclear, 2025 ed.; Westfleet Insider, 2024 and 2025)

So what?

Every other reform route is still stuck upstream. Grassley's Litigation Funding Transparency Act (S. 3826) has sat in Judiciary without a hearing since February. The Advisory Committee on Civil Rules took up initial disclosure in April and published no text, which puts any rule change years out. New York's new act reaches consumer funding, not the commercial funding behind the suits carriers defend, and Colorado's foreign-funding statute has been live since August 2025. The wording is the only thing that actually moved.

The cost side is not in dispute. Marathon Strategies counted 135 verdicts above $10 million in 2024, totaling $31.3 billion, up 52% in count and 116% in dollars over 2023. Forty-nine cleared $100 million, against 27 the year before.

One correction to the usual framing. Westfleet Advisors surveys the US commercial funding market directly. New commitments fell to $2.3 billion in 2024, down 16% and nearly 30% below 2022, then rebounded about 23% in 2025 across 39 funders. Roughly a fifth now carry insurance of their own. Read that through: some carriers are on both sides of the same claim chain, underwriting the plaintiff's funding while defending the insured.

So the decision is narrow. Whether the January condition goes on your 1/1/27 book, and whether your large-loss triage flags a funded claim today. If you write on delegated authority it reaches you twice, on the forms you bind and on your own defense.

Concentration and opacity are the exposure now. Top-line growth is not.

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The Bottom Line

Every item today describes information that arrives too late to be useful, or never arrives at all.

A claim crossing four programs does not look like a coverage question until somebody has to fund a retention. A program nobody has benchmarked looks fine right up until you see what a peer carries. A funded plaintiff does not look funded at all, unless somebody made disclosure a condition of coverage months earlier.

None of that gets fixed during a claim. It gets fixed in wording, at renewal, while everyone is calm. What separates the firms that handle this well is simple. They go and find the information while it is still cheap to act on.

Three questions for your next risk committee:

1. If a claim on a risk we underwrote turned into a question about our own oversight, which policy responds first, and who at this table makes that call? And do we put every implicated tower on notice the same day, or just the one the claim arrived in?
2. Twenty peers just ranked what they want from a carrier, and price came fourth. Have we ever benchmarked our own program that way, or do we just compare this year's premium to last year's?
3. If a funded claimant sued us tomorrow, how would we find out, and is funding disclosure on our 1/1/27 wording agenda?

If any of the three is on your renewal list, reach out for a confidential conversation.

Stay Covered Everybody,

-FLIP

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P.P.S. Nothing in this briefing constitutes legal, coverage, or compliance advice. This is market intelligence designed to help you ask sharper questions of your advisors and make better decisions at renewal.

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