State of the professional indemnity insurance market
The first half of 2019 has proven challenging for many professional services firms renewing their professional indemnity insurance policies. Increased claims activity and several large settlements have pushed insurer’s net underwriting combined ratios over 100%, indicating it is unprofitable. APRA’s latest quarterly statistics reports that net combined ratio for March 2019 was 103%, this means that for every $1 in premium an insurer collects they are losing $1.03.
With limited investment return, insurers are experiencing increased scrutiny from overseas parent entities and Lloyd’s to return their books to profitability. As a result, several Lloyd’s syndicates have stopped writing Australian professional indemnity business and Australian insurers are reassessing their appetite for certain professions. Less competition has allowed other insurers to return to profitability by significantly increasing their premiums.
Lawyers and construction workers are heavily impacted professions, with an average premium increase of 30% and 26% respectively based on Aon’s proprietary data.
Consultants exposed to cladding such as fire engineers, building certifiers, façade manufactures, and valuers have been impacted the most. They’re experiencing 3 figure premium increases if they can even obtain insurance at all.
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