2024 Professional Indemnity Market Update
Snapshot
- After six challenging years for professional services firms, the tide is turning and premium relief is in sight for most insureds.
- Improved Professional Indemnity loss ratios and competition from other classes of insurance are seeing insurers re-enter the PI market with force.
- Now is the time to remarket your PI program and reap the benefits.
The last 12-18 months have evidenced a distinct two-tiered approach to the way risks are treated in the professional indemnity (PI) market. At a broad level, market conditions resulted in a “two-speed economy”, with outcomes characterised by whether an insured’s risk sits within an insurer’s target business.
In the second half of 2023 we welcomed new capacity to the market with Everest, Markel and Probitas all establishing operations in Australia. This new capacity has started to drive competition particularly at an excess of loss level, and with the launch of primary policy wordings prior to June 2024 starting to also translate to a primary placements.
Looking at the claims environment, the impacts of inflation on PI claims have had a consequential impact to professional service firms beyond the cost of a PI policy.
The insurance rate environment sees underwriters consistently concerned about increasing defence costs, particularly for complex claims matters. This, combined with underwriting challenges, such as the general increase in high quantum claims, has created rate pressures over the past few years.
Overall, with favourable PI market conditions on the horizon and new entrants keen to grow their portfolios, Aon recommends organisations take the opportunity now to review and reset their PI programs.
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