Insurance Market Update 2008

August 2008

We have just seen the completion of one of the busy renewal periods of the financial year ending 30th June 2008.

During the competitive market of the past few years many purchasers of professional indemnity insurance have experienced premium reductions and hopefully an improvement in the scope of cover provided by your policy wording.

Following the busy June renewal period we are pleased to advise the competition continues albeit at a lesser pace.

What is happening in the insurance industry however is a lot of 'talk' about the hardening of the market. Whether this is just wishful thinking by insurers or not is yet to be seen.

The fact is that the insurance industry has generally delivered reductions in premium and improvements in cover for each of the last four years and is fast running out of room to make any further improvement in these areas.

We have also seen the emergence of market characteristics that tend to only exist immediately prior to the market changing to become more expensive. Some of these characteristics are:-

  • the emergence of new underwriting capacity;
  • insurers releasing underwriting authority to brokers under binding agreements;
  • combination of more than one type of insurance under the one policy document
  • increased brokerage commission paid to brokers;
  • increased limits of liability for minimal additional premium;
  • insurers bolstering profit through release of loss reserves;
  • lower excesses
  • high risk professions securing very competitive alternative terms;
  • declining profitability of the insurance industry in general;

It is generally expected that a hardening of the market is due to occur sometime during the next 12 months. Whilst this process is not expected to occur as dramatically as in 2001, it is likely to occur gradually over the next few years.

We recommend that you commence now to implement strategies to minimise the impact this hardening market will have upon your renewal. As a client of BRIC you should already have some knowledge of this strategy - if not please ring to discuss this further. BRIC will - as usual - discuss the current status of the market with you prior to your renewal and agree the most appropriate strategy to secure the best possible outcome for your renewal.

 

 
 

BOVILL RISK & INSURANCE CONSULTANTS

Specialist Insurance Brokers