IBUK 5-Star Professional Indemnity Insurers 2021

SPECIAL REPORT

2021

PROFESSIONAL INDEMNITY INSURERS IBUK surveyed brokers to find out which insurers are providing the best coverage in the UK professional indemnity market

CONTENTS

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Feature article ............................................................ 2 Methodology .............................................................. 3 5-Star Professional Indemnity Insurers 2021 ....... 5

SPECIAL REPORT

5-STAR AWARDS: PROFESSIONAL INDEMNITY INSURERS

PROFESSIONALS RISE ABOVE A BROAD segment of the insurance market, professional indemnity insurance (PII) helps keep critical businesses working away at often complicated tasks, protecting against acts of negligence that can happen to anyone.

PII includes everything from coverage for directors and officers (D&O) and employment practices liability insurance (EPLI) to industry-specific coverages for professionals like lawyers, designers/architects, doctors, accountants and construction professionals.

Currently, there is a significant loss envi-

“We continue to successfully monitor any COVID-19 exposure very carefully across all of our professional lines” Joanne Edgley, Nexus Underwriting

ronment in PII across the UK, with typical claims revolving around the pandemic and business interruption claims. The construc-

WHAT’S MOST IMPORTANT TO BROKERS WHEN CHOOSING A PROFESSIONAL INDEMNITY INSURER? Claims payment/processing

Service to the broker

Underwriting expertise

Ability to create a suitable bespoke policy Value for money

Access to risk mitigation partners

Online platform

0%

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20%

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40%

60%

80%

100%

tion industry is also facing PII claims from fire safety, cladding and combustibility issues – lingering fallout from the 2017 Grenfell Tower fire in London.

On top of that, the PII segment has been recently undergoing a correction – the unsustainably low rates of a previously soft market have been hardening as insurers reduce their risk appetite, line size deployment and capacity in the face of a daunting COVID-19-fuelled economic downturn.

“Economic uncertainty, a prolonged lockdown environment and the fallout from the pandemic in general have led to the potential for increases in a range of losses across various insurance sectors, including financial lines,” says Jacqueline McNamee, the CEO of C-Quence, an insurtech MGA that offers management liability coverage, including D&O. Joanne Edgley, managing director of financial lines – professional indemnity at Nexus Underwriting, adds that losses in the sector stem from “systemic issues in areas such as financial services, knock-on effect

on the construction industry post-Grenfell, claims arising from macroeconomic factors, recession and the global financial crisis.”

The market today and tomorrow Both McNamee and Edgley are keeping a close eye on lingering damage from COVID. “We continue to successfully monitor any COVID-19 exposure very carefully across all of our professional lines,” Edgley says.

She adds that Nexus strives to provide brokers with “continuity and longevity, service levels, strong relationships, the ability to underwrite ‘outside of the tick box’, [and] the ability to be creative and adaptive

processing from quote to bind, as well as reliable and effective claims service, McNamee says – all areas that brokers told IBUK are of vital importance when selecting a professional indemnity insurer or MGA partner.

As for where the PII market might be headed in the next five years, “predicting the future is never easy,” McNamee says. “We have learned to expect the unexpected.”

McNamee sees the market continuing to harden as the global economy begins the long road to recovery, and she says C-Quence will continue to improve its structured data to offer customers better perspective on pricing and terms and conditions to ensure

“Predicting the future is never easy. We have learned to expect the unexpected”

METHODOLOGY To select the best professional indemnity insurers for 2021, Insurance Business UK sourced feedback from insurance brokers over a period of 15 weeks. IBUK’s research team began by conducting a survey with a wide range of brokerages to determine what brokers value in a professional indemnity insurer. The research team also spoke to hundreds of top brokers across the region by phone, asking them to rate the professional indemnity insurers they had worked with over the previous 12 months.

At the end of the research period, the insurers that received the highest ratings from brokers in terms of work quality, specialist expertise and client service were declared 5-Star Award winners in professional indemnity.

Jacqueline McNamee, C-Quence 95% to underwriting risk, as well as fast and fair claims service.”

McNamee notes that the pandemic highlighted the industry’s outdated platforms and business practices, as brokers often lacked access to underwriters, delaying quotes and cover for clients. That allowed C-Quence to stand out by providing uninterrupted access to its cloud-based trading platform and underwriters.

“C-Quence was, in fact, created to transform the broker experience through lifecycle process automation and by applying and integrating extensive third-party risk and client data and the application of sophisticated pricing [and] predictive, segmented portfolio tools and techniques using thousands of algorithms,” McNamee says.

Ultimately, she adds, C-Quence’s technology is all about maintaining excellent service and quality levels for brokers. That includes individual risk-appropriate pricing, easy access to underwriting, and efficient

consistency and sustainability.

Edgley also sees continued hardening of rates and terms and conditions in the PII segment, which should increase insurers’ profitability. She believes underwriting expertise needs to improve and adapt to align with the new economic landscape of the post-COVID-19 era and that quality risk management should become an intrinsic part of any insured’s business.

As for what separates the 5-Star Professional Indemnity Insurers from the rest, both women agree that one factor is paramount.

“In a word – ‘service’,” McNamee says when asked what helped C-Quence win over brokers, “from the ease and speed of generating a quote, including super-fast referral decision-making, to access to an experienced underwriter team to the immediate delivery of concise and comprehensible policy documentation.”

Meanwhile, Edgley believes Nexus Underwriting gained brokers’ votes “because

of brokers said competitive pricing is important when choosing an MGA for professional indemnity

87% of brokers said an MGA’s reputation is important in the professional indemnity space

73% of brokers said it’s important for an MGA to provide efficiency through technology

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SPECIAL REPORT

5-STAR AWARDS: PROFESSIONAL INDEMNITY INSURERS

NUMBER OF AWARD WINNERS BY CATEGORY Lawyers

Multinational

5

4

Designers/architects

SME

2

3

Accounting/financial

Nonprofit/charity

5

2

Construction

D&O – multinational

5

4

Medical

D&O – SME

5

EPLI

D&O – nonprofit

5

of our service levels, a flexible approach to risk selection and our dedication to provide solutions to insureds’ insurance placement.”

What are brokers looking for?

As part of the survey to determine the 2021 5-Star Professional Indemnity Insurers, IBUK asked brokers what’s most important to them when selecting a professional indemnity insurer. Three criteria dominated brokers’ priority list, each deemed important by 88% of respondents: claims payment and processing, underwriting expertise, and service to the broker.

“Good service” was mentioned frequently when brokers were asked why they would

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recommend their insurer or MGA partner to another broker. “General service levels are important – when requesting quotes, when sending in renewals, just the general service level,” one broker noted.

Another critical factor for brokers (ranked as important by 75% of respondents) is an insurer or MGA’s ability to create a bespoke policy for their PII clients. One broker praised their MGA’s “willingness to find a practical solution for clients”.

Getting good value for money was also fairly important to brokers – 63% rated it as an important factor when choosing a professional indemnity insurer. Several brokers mentioned competitive pricing when asked

why they would recommend their favourite insurer or MGA. Less important to brokers in the PII segment was an insurer’s access to risk mitigation partners (deemed important by only 38% of brokers) and online platform (which only 13% of brokers would consider when selecting a professional indemnity insurer).

IBUK also asked brokers what qualities would draw them to an MGA in the PII space. A healthy proportion of brokers (90%) said MGAs’ expertise in niche markets is key.

“The market is moving more towards MGAs, giving us access to niche markets – it’s a higher-value proposition for brokers,” one survey respondent said. Another said they choose MGAs for their professional indemnity clients because “it’s their specialism. I don’t need them to be the same as a main general market. I want people who are real specialists.”

Brokers also enjoyed MGAs’ access to a wider variety of markets and carriers; 87% rated this as an important factor when using an MGA. “It’s important for an MGA to be able to offer an alternative option to the standard in the market,” said one respondent. However, a couple cautioned that capacity is sometimes a challenge with MGAs. “Capacity is important to us,” one broker said. “It’s useful to have an MGA, but we need to be confident in their capacity.”

Another factor that came up again and again when brokers were asked why they choose to work with MGAs was their agility compared to larger insurers, which enables them to be more responsive and innovative. “[MGAs] tend to be small, and I think the big brokers/insurers struggle to innovate. A good MGA is like what biotechs are to pharmaceutical companies,” one broker said.

Another noted that “during lockdown, MGAs have outperformed the market for service and support. The big players have struggled to get a handle of staff, but MGAs are smaller in staff and more controlled, and staff tend to be more experienced and self-sufficient.”

PROFESSIONAL 2021 INDEMNITY INSURERS OVERALL

D&O – SME

ACCOUNTING/FINANCIAL

AIG

AXA XL

AXIS

Manchester Underwriting Management

C-Quence

Great Lakes Insurance

Pen Underwriting

Manchester Underwriting Management

Liberty Specialty Markets

Tokio Marine HCC

MULTINATIONAL AIG

Nexus Underwriting

Manchester Underwriting Management

Pen Underwriting

Sompo International

D&O – NONPROFIT

CONSTRUCTION

Manchester Underwriting Management

AXA XL

AmTrust

Sompo International

C-Quence

Collegiate Underwriting

Manchester Underwriting Management

Manchester Underwriting Management

Nexus Underwriting

Tokio Marine HCC

Tokio Marine HCC

SME

Pen Underwriting Manchester Underwriting Management Tokio Marine HCC

NONPROFIT/CHARITY

MEDICAL LAWYERS Allianz

Hiscox

AXIS

Manchester Underwriting Management

Manchester Underwriting Management

Liberty Specialty Markets

Markel

Manchester Underwriting Management

D&O – MULTINATIONAL AXA XL

AXIS

Newline Group Travelers

Pen Underwriting

EPLI DESIGNERS/ARCHITECTS CFC Underwriting

Chubb AIG

Hiscox

Manchester Underwriting Management

Manchester Underwriting Management

Manchester Underwriting Management

Pen Underwriting

Tokio Marine HCC

Pen Underwriting

C-Quence

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SPECIAL REPORT

5-STAR AWARDS: PROFESSIONAL INDEMNITY INSURERS SUMMARY: 5-STAR AWARD WINNERS BY CATEGORY Carrier

Overall

AIG Allianz AmTrust AXA XL AXIS CFC Underwriting Chubb Collegiate Underwriting C-Quence Great Lakes Insurance Hiscox Liberty Specialty Markets Manchester Underwriting Management Markel Newline Group Nexus Underwriting Pen Underwriting Sompo International Tokio Marine HCC Travelers

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Multinational

SME

Nonprofit/charity

D&O – multinational

D&O – SME

D&O – nonprofit

Lawyers

Designers/architects

Accounting and financial

Construction

Medical

EPLI

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SPECIAL REPORT

5-STAR AWARDS: PROFESSIONAL INDEMNITY INSURERS

2021

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