What is Happening in the Professional Indemnity Insurance Market?

There appears to be a rising level of anxiety amongst various professionals in Australia with respect to the cost and availability ofprofessional indemnity, as well as their ability to secure ongoing insurance.

Whilst we are seeing some changes in insurer appetites and premiums, the reality is not all doom and gloom - far from it.

BRIC are considered the largest broker of engineers, building surveyors as well as arranging insurances for many other professionals so we have some real hands on experience in monitoring the insurance marketplace and where it is headed.

The concern of some professionals who are NOT our client is:-

Will I be able to renew my professional indemnity insurance?

Anecdotal evidence from a couple of professions where the firms are not clients of BRIC is that some firms have been unable to secure renewal of their policy and therefore have had to close down their business. We have not had such difficulties obtaining insurance for our clients. Without exception, during the last 12 months we have not experienced ANY instances where one of our specialist brokers has failed to secure ongoing professional indemnity insurance for existing clients.

If a firm has not been able to obtain insurance it is likely due to failings on the part of the insurance broker rather than the risk profile of the specific firm. It is not uncommon for BRIC to successfully arrange insurance for firms that have previously been advised by other brokers that they cannot secure insurance.

With respect to premium increases; there is a general tightening in the insurance market for some segments namely building surveyors, structural and geotechnical engineers, especially coming out of the Lloyd's of London market and for those firms with significant claims experience.

Conversely we are experiencing considerable success in securing substantial reductions in premiums for new business prospects who come to us. Some have been very happy with their current insurance broker only to discover they have been paying thousands, sometimes tens of thousands, too much every year!

We have analysed our current professional indemnity portfolio and the average premium movements for our clients during the 12 month renewal period to May 2015.

On average, premiums have:

  • Increased by 10% for engineers
  • Increased by 15% for building surveyors
  • Increased by 7% across our entire portfolio of engineering and construction related professionals

It is important to note that these average increases include those clients who have had significant premium increases due to adverse claims experience, which pushes the average up significantly; many of our clients have experienced reductions and/or flat renewal premiums during the current cycle.

Nothing in the above data supports the assertion that premiums are increasing by disastrous proportions or reflective of market failure as some would have you think.

Whilst we have seen a limited number of insurers exit certain high risk market segments over the last year we currently have our clients placed with 25 different insurers/agencies/syndicates; this simply does not support the hypotheses that the insurance market is in the early stages of failure.

BRIC have been championing the cause of improved Risk management in your businesses for the past 10 years and are pleased to see some clients take on this responsibility by developing documented risk management policies and procedures. Having sophisticated risk management policies and procedures assists us in presenting your business to insurers and those clients that have done so have also been successful in minimising the impact of premium increases on their business.

Should you wish to explore the improvement in your risk management strategies or would like us to review what you do, then please give us a call.

If you are aware of colleagues who are having difficulty securing ongoing insurance then please refer them to us. Our role is to secure cover for risks that are is difficult to place.

As stated earlier, BRIC have not had one single existing client where we have been unable to secure ongoing professional indemnity insurance during the past 12 months.

If you or someone you know is having difficulties with your renewal then call BRIC now! 1800 077 933

 
 

BOVILL RISK & INSURANCE CONSULTANTS

Specialist Insurance Brokers