The Risk and Insurance Management Society (RIMS) has announced that Nevada's proposed elimination of "defense within limits" insurance provisions could affect the state's professional liability market by increasing costs. This announcement was made in a report released on January 15.
According to RIMS, Nevada's proposal would prevent legal defense costs from being included within the liability limits of commercial insurance policies. These provisions are commonly used in professional liability insurance to manage financial exposure and risk.
Assembly Bill 398, effective October 1, 2023, prohibits Nevada insurers from issuing or renewing liability policies that reduce policy limits by defense costs, as reported by The National Law Review. The legislation applies to various insurance products, including Directors and Officers Liability, Errors and Omissions, and Cyber Liability.
CRC Group suggests that the prohibition of defense-within-limits provisions in Nevada may lead to increased premiums and reduced availability of liability insurance products. Insurers might adjust policy structures by implementing higher retentions or co-insurance requirements to address increased risks.
According to their LinkedIn profile, RIMS is a nonprofit organization headquartered in New York City. It serves a global community of risk professionals through networking, advocacy, certification, and research initiatives. The organization is recognized for its 80 chapters worldwide and its annual RISKWORLD conference.