SPECIAL REPORT BUSINESS STRATEGY
5-STAR AWARDS 2021: PROFESSIONAL INDEMNITY INSURERS
STANDING OUT IN A HARD MARKET THE PROFESSIONAL indemnity market has been a tough nut to crack for some time now, with policy excesses and premiums spiralling upwards, low capacity, tighter policy conditions and, in some sectors, a limited number of insurers who are willing to provide cover. In its recent Professional Indemnity Market Update, Willis Towers Watson pointed to a widespread reduction in capacity as a significant hurdle in a market that has been hardening since 2017, noting
which led to a big drop in capacity for the Australian market that continued into 2020. Insurers responded by being more selective about who they will cover; others opted out of renewing binders in certain professional indemnity markets. Yet the need for insurance for those providing advice or a service, in the event of legal action claiming malpractice or misconduct, has never been more keenly felt. Not only is PI insurance a mandatory requirement for professions such as lawyers,
“Clients who do not understand why they cannot get terms or the significant increase in their premiums depend on a broker’s advice” Paul Burton, PI Direct Insurance Brokers that “reductions from $20m to $10m, or even as little as $5m in some cases, are common”. Premium hikes are also rampant in today’s market, according to WTW, which pointed out that rises of 50% and 100% are common and noted that “we have even seen increases as much as 2,000% in some extreme cases”. Events in the London market have also had an impact. When Lloyd’s undertook its Decile 10 review in 2018, PI was identified as one of its worst-performing classes,
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doctors, real estate agents and stock agents, but it’s also becoming increasingly critical for a wide range of other occupations, from contractors to copywriters. The cost of being uninsured or underinsured can be crippling in the event of a claim – it can even put companies out of business.
The hardest markets Two segments of the PI market have been particularly hard-hit. Driven in part by a surge in shareholder litigation, directors &
METHODOLOGY To select the best professional indemnity insurers for 2021, IB surveyed hundreds of brokers to gain a keen understanding of what insurance professionals think of current market offerings. Brokers were first quizzed on what features they thought were most important in a professional indemnity policy and then asked how the companies they dealt with rated on those attributes. The winners were measured on their ability to handle claims, their underwriting expertise and, most importantly, the strength of the individual products they provide.
80% of brokers said underwriting expertise is very important when choosing a PI insurer
68% of brokers said claims processing and payment are very important in PI
36% of brokers said a PI insurer’s access to risk mitigation partners is very important
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