Your source of professional indemnity insurance market trends and analysis for Q4 2018.
- The Professional Indemnity (PI) market has deteriorated significantly over the last quarter with no signs of it easing in the short term.
- The cooling Australian property market, the commencement of the royal commission into aged care and the findings from the banking, superannuation and insurance review are all concerns for insurers.
- Lloyd’s have commissioned a review of their worst performing classes following an underwriting loss in 2017, which includes PI.
- The macro environment, industry specific issues and claims losses are all impacting PI market pricing, coverage and deductibles.
- Looking ahead to 2019 – clients can expect PI rates to increase at least 5-10% and much higher for the riskier industries and insureds with claims.
State of the Market
Insureds have been the beneficiaries of 10-15 years of rate reduction driven by historic abundance of capacity in the market. For many professions 2017 rates were half that
of 2004. Over this period the average time to settle a claim has stretched from 5 to 9 years prolonging insurers ability to gain full visibility over the performance of their
portfolio for any one year. Increased claims activity along with margin erosion has resulted in many insurers experiencing losses on their PI portfolio.
At a macro level, easing of the Australian property market, commencement of the royal commission into the aged care sector and resultant reforms from the banking, finance and insurance review are all concerns for insurers. Over-laid with contagion issues such as cladding and plastic piping in the construction sector; advice on self-managed super funds by accountants; emerging crypto currency risks; and consequential cyber security claims hitting the IT industry, insurers are placing far greater scrutiny on their underwriting assessment, rates, terms and conditions.
The London market is in the middle of one of the largest shake ups in its history with Lloyd’s implementation of the ‘Decile 10’ remediation review of which International PI is one of the worst performing classes.
Download the insights to learn more.
© 2019 Aon Risk Services Australia Limited | ABN 17 000 434 720 | AFSL 241141 (Aon)
The information contained in this communication is general in nature and should not be relied on as advice (personal or otherwise) because your personal needs, objectives and financial situation have not been considered. Before deciding whether a particular product is right for you, please consider your personal circumstances, as well as the relevant Product Disclosure Statement (if applicable) and full policy terms and conditions available from Aon on request. All representations in this document in relation to the insurance products we arrange are subject to the full terms and conditions of the relevant policy. Please contact us if you have any queries.