Insurers optimistic at BIBA - May 24

Published: Friday, 14 June 2024

An update on market conditions following the annual insurance brokers conference

What’s happening in the Professional Indemnity Insurance market?

There was a welcome change in mood amongst the professional indemnity insurers I met at BIBA (the annual insurance broker national conference) last month.

For the previous 5 years, insurers have maintained a tough line, with little sign of reducing premiums or improving cover. Most were content to focus on retaining their current policy holders rather than seeking new business.

What has changed?

1. Interest rates

   The rise in interest rates has improved investment returns which helps to cushion insurer results when claims are larger than forecast.

2. Insurer losses

   In the pandemic, insurers were nervous about professional service businesses working from home. They felt that there could be reduced oversight and scrutiny leading to an increase in claims. This has not happened, and our experience has been that very few potential claims notified have had WFH as a factor.

   There are certainly plenty of ‘live’ claims and one prominent insurer is scaling down its book of business significantly, citing losses as the reason. Judging by the competitive forces seen in the market it looks like most Insurers have not been hit badly in recent years.

PI changes by sector

Construction professionals are benefitting

Following the Grenfell tragedy, Insurers had reacted very negatively with premiums climbing sharply and high-risk exposures being excluded from cover. Challenges remain for construction professionals, but most seem to agree that Insurer reaction in recent years has been somewhat ‘over-egged’, and we are now seeing a settling back to more normal levels of cost with some of the cover recently excluded being reintroduced.

Many Insurers at the conference recounted stories of premiums being offered by competitors at a fraction of 2023 levels, although most examples related to policies for professionals in construction.

Accountants premiums are easing

Insurers generally did not apply the same premium increases to accountants as other professions experienced during the ‘hard’ phase of the underwriting cycle. Premiums are stable for most, and falling for lower risk practices. Firms with a history of claims or higher risk features can still find renewal challenging.

Solicitors PII premiums are also easing

Well-run businesses, that present their renewals with care, should be able to achieve significant savings as some insurers are keen to expand in this area.

Nearly every Insurer I spoke to at the conference, with hardly any exception, has a plan to grow and stretching targets for the year so market conditions should be good news for most.

Gary Horswell
Managing Director, Ntegrity

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