Professional Indemnity Insurance in the UK, Key Trends and Opportunities to 2017

Professional Indemnity Insurance in the UK, Key Trends and Opportunities to 2017

Regular price $2,795.00 Sale

Premium growth in the professional indemnity insurance category remained soft during the review period (2008-2012), and declined at a compound annual growth rate (CAGR) of 0.20%, as an increase in professional negligence court cases and the volume of registered professionals requiring cover was outweighed by the recessionary economic backdrop. Premiums rose by 2.8% in 2012, to a total of GBP2.05 billion, while a further GBP0.60 billion is estimated to have been underwritten by syndicates on the Lloyd's market.

Despite soft premium growth, the availability of professional indemnity insurance worsened, particularly for surveyors, small firms of solicitors and independent financial advisers (IFAs). For solicitors, the broad scope of insurance coverage requirements stipulated by the Solicitors Regulation Authority exposes insurers to a high level of risk, while in the surveyor and IFA sub-categories, insurers reduced capacity due to growing apprehension over rising claims related to property valuations and failed investments.

The professional indemnity insurance category is projected to generate GBP2.33 billion in premiums by 2017 and premiums are forecast to rise at a CAGR of 2.57% over the forecast period (2013-2017), with growth expected on an annual basis. An expected increase in the number of professionals subject to compulsory professional indemnity insurance requirements and insurers expanding into sectors with voluntary insurance needs, such as engineering, information technology and marketing will act as the key growth drivers. Marked improvements in the UK's economic conditions as the country enters a stronger recovery phase will provide a further impetus for growth in demand.

Professional bodies such as the Solicitors Regulation Authority (SRA), the Royal Institute of Chartered Surveyors (RICS) and the Association of Professional Financial Advisers (APFA) have expressed dismay at members' ongoing struggles to obtain professional indemnity cover. Large insurers withdrew policies for these clients during the review period, citing unsustainable risk exposure as the reason. The SRA compounded access issues through its abolition of a communal risks pool in 2013, which resulted in the closure of 136 firms unable to obtain mandatory insurance coverage.

Stronger economic growth over the forecast period is expected to ease litigation and reduce claims costs. Nevertheless, the six-year statute of limitations means insurers remain liable for negligent acts which occurred during the recession. A further risk to the outlook of claims stems from the Retail Distribution Review (RDR) increasing the exposure of whole-of-market advisers to rarer investment instruments, and the April 2013 Jackson reforms influencing compensation levels negotiated by lawyers.

Report Highlights
  • Muted growth was recorded during 2008-2012
  • Despite soft prices, insurance was difficult to obtain
  • The category will benefit from favorable factors during the forecast period
  • Capacity for higher-risk groups remains an issue
  • Claims will be subject to upside pressures
Report Scope
  • This report provides market analysis, information and insights into the UK professional indemnity insurance business
  • It provides a snapshot of the market size
  • It analyses drivers and the outlook for the market
  • It provides information on distribution channels
  • It covers deals, news and regulatory developments
Reasons to Get this Report
  • Gain an understanding of the UK professional indemnity insurance market
  • Learn about the performance of market drivers and distribution channels
  • Understand the competitive landscape in terms of performance, profitability and product innovation
  • Find out more on key deals and recent developments in the market


Table of Contents

1 Executive Summary
2 Introduction
2.1 What is this Report About?
2.2 Definitions
2.3 Methodology
3 Market Analysis
3.1 Market Size
3.1.1 Penetration and density
3.2 Claims
3.2.1 Claims review
3.2.2 Claims outlook
3.3 Market Drivers
3.4 Market Outlook
3.5 Distribution Channels
3.5.1 Distribution outlook
4 Competitive Landscape
4.1 Investment Returns
4.2 Review - The Best Performers of 2012
4.3 Product Innovation
4.4 Professional Indemnity Insurance - SWOT Analysis
5 Porter's Five Forces Analysis
5.1 Bargaining Power of Suppliers: Low
5.2 Bargaining Power of Buyers: Low
5.3 Barriers to Entry: Medium to High
5.4 Intensity of Rivalry: Medium
5.5 Threat of Substitution: Low
6 Deals
6.1 Law Society Venture for Small Legal Firms
6.2 Aon and QBE Absorb Capacity
6.3 JLT Renews Deal with AmTrust
6.4 Willis Expands its Professional Indemnity Broker Network
7 News
7.1 Royal College of Nurses Closes Indemnity Loophole
7.2 HCC International Expands its Professional Indemnity Team
7.3 RICS Cites Unnecessary Claims by Mortgage Lenders
7.4 SRA Considers Ban on Unrated Insurers
7.5 Uninsured Solicitors Firms Forced to Close
7.6 XL Trims its Share of Solicitors' Indemnity Insurance
7.7 New Underwriter for IFAs
7.8 Balva Issued with Winding-Up Order
7.9 Aviva Withdraws SME Cover
8 Regulation and Compliance
8.1 Recent Changes
8.1.1 Legal Aid, Sentencing and Punishment of Offenders Act 2012 (LASPO)
8.1.2 Health Care and Associated Professions (Indemnity Arrangements) Order 2013
8.2 Upcoming Regulations
8.1.4 Solvency II
9 Macroeconomic Backdrop
9.1 Real GDP Growth
9.2 Property Market Dynamics
9.3 Labor Market Conditions
9.4 Interest Rates
10 Company Profiles
10.1 ACE European Group Ltd - Company Overview
10.1.1 ACE European Group Ltd - key facts
10.1.2 ACE European Group Ltd - main products
10.1.3 ACE European Group Ltd - main competitors
10.1.4 ACE European Group Ltd - key employees
10.2 AIG Europe Ltd - Company Overview
10.2.1 AIG Europe Ltd - key facts
10.2.2 AIG Europe Ltd - main products
10.2.3 AIG Europe Ltd - main competitors
10.2.4 AIG Europe Ltd - key employees
10.3 AmTrust Europe Ltd - Company Overview
10.3.1 AmTrust Europe Ltd - key facts
10.3.2 AmTrust Europe Ltd - main products
10.3.3 AmTrust Europe Ltd - main competitors
10.3.4 AmTrust Europe Ltd - key employees
10.4 Chubb Insurance Company of Europe SE - Company Overview
10.4.1 Chubb Insurance Company of Europe SE - key facts
10.4.2 Chubb Insurance Company of Europe SE - main products
10.4.3 Chubb Insurance Company of Europe SE - main competitors
10.4.4 Chubb Insurance Company of Europe SE - key employees


Companies Mentioned:

ACE European Group Ltd
AIG Europe Ltd
AmTrust Europe Ltd
Chubb Insurance Company of Europe SE
CNA Insurance Company Ltd
HCC International Insurance Company Plc
Hiscox Ltd
QBE Insurance (Europe) Ltd
Royal & Sun Alliance Insurance Plc
XL Group Plc