As the current economic environment puts pressure on organisations both small and large, it is also impacting the Professional Indemnity market. After cumulative years of premium increases and other portfolio remediation strategies driven by insurers, a stabilisation of the sector was expected, however we are seeing inflated claims costs and additional risk exposures holding and continuing to put pressure on Professional Indemnity premiums.
Aon’s insights report for H1 2023 explores current trends and developments impacting the Professional Indemnity insurance market in Australia, including:
- Claim Settlement Costs: Whilst claims costs for small clients are fairly stable, the number of large claims remains at a consistently high level, driving higher overall claim settlement costs and premium increases.
- A Two-Tier Market: Insureds considered low risk are experiencing a renewed interest from new or alternative markets, while Insureds in distressed industries continue to experience challenging conditions.
- Capacity: Whilst capacity remains relatively constrained overall, Aon anticipates an increase in the supply of capacity as the year progresses.
- Coverage: Insurers are applying specific coverage restrictions in response to perceived systemic or accumulative risk concerns. Key coverage points of concern include Loss Mitigation, Consequential Loss Exclusions, and Silent Cyber Exclusions.
- Outlook Beyond 2023: While Professional Indemnity loss ratios show improvement, the broader economic environment continues to create a number of challenges.
- Industry Highlights: Challenging market conditions continue across construction, FinTech and emerging technologies, and solicitors.
- Top Tips for Renewal Preparation: Understanding how insurers view your industry and what their key pain points are (and positioning your renewal in response) will aid in achieving a more favourable renewal outcome.
In the current economic environment, insurers are loading premiums to cover increased claims costs. Until we see a stabilisation in the economy, we expect Professional Indemnity premiums to remain under pressure.
Download the full report for more insights to help you take control over how your risk is viewed and rated.