London Market Professional Indemnity Report July 2021
Insurance 2022 - the year ahead
There is little comfort ahead for buyers of professional indemnity insurance – particularly those who found their 2021 renewal somewhat challenging.
Appetite to grow the book for accountants, management consultants, insurance brokers and financial advisers is particularly weak with 95% of insurers expecting to see more PI claims and over two thirds (67%) expecting them to be more severe in 2022, according to our research.
The industry acknowledges that there are three key areas where COVID-19 might change buyers’ risk profiles in the next five years. The first is the heightened threat associated with weakened supervision, cited by over two thirds of market practitioners. Businesses acknowledge they face the double challenge of monitoring the quality of work performed remotely while simultaneously preparing for the impact of heightened oversight from regulators and professional bodies keen to ensure that standards are maintained amid the new ways of working.
Increased privacy, cyber and ransomware exposures including as a result of remote working are also a top worry, cited by well over half of respondents, as well the financing and insolvency consequences of the economic impact of the recession.
Against this backdrop, all buyers and 99% of insurers expect rates to rise through 2022 and many are already seeing changes in terms with over a third reporting higher deductibles and 29% a reduction in coverage. Almost a quarter (24%) are seeing more exclusions and we predict there will be a particular crunch around cyber cover in 2022 with many carriers looking to make this a standalone product.
Despite the many concerns, however, there is no shortage of enthusiasm, or capacity, for good risks. The challenge for buyers, and their brokers, is how to ensure they position for a solid renewal.