Table of Contents
- Overview
- Executive Summary
- Professional indemnity GWP continued to fall in 2007 due to weakening
premium rates
- The professional indemnity market declined by 2.0% between 2006 and 2007
- Professional indemnity players are looking to the online platform to grow
their business
- The internet has become an increasingly popular method for attracting
PI business
- Lloyd' s share of the professional indemnity market continues to be eroded
by the company market, although the rate of decline is slowing slightly
- Lloyd' s continues to lose market share in the professional indemnity
market
- The market is expected to harden early in 2009 and GWP will grow strongly
- A variety of factors are likely to contribute towards GWP growth during
the forecast period, however, premium rates are expected to have the
greatest impact
- Table of Contents
- Table of figures
- Table of tables
- Chapter 1: Introduction
- What is this report about?
- Who is the target reader?
- How to use this report
- Chapter 2: Market Context
- Introduction
- Professional indemnity GWP continued to fall in 2007 due to weakening
premium rates
- The professional indemnity market declined by 2.0% between 2006 and 2007
- Premium rates declined across all areas of professional indemnity,
although product penetration increased
- The 10% decline in premium rates in 2007 was smaller than the fall
witnessed in 2006
- Reduced premiums and fierce competition have left the solicitors'
market in a precarious situation
- New markets are continuing to drive the take up of PI
- Competition remained fierce despite the market being broadly un profitable
- Profitability suffered in 2007, as competitors continued to compete
fiercely for business
- Claims costs have remained at low levels
- The downturn in the housing market is likely to increase the volume of
claims
- The downturn in housing prices is likely to impact negatively on the
market, as mortgage fraud may push up claims in 2008
- Poor quality guidance on the value of an estate may lead to an
increase in claims
- Two rulings set new precedents in the professional indemnity market,
while the Legal Services Act will also shake up the market
- No indemnity payout for partners that condoned"dishonest"
dealings in Zurich v Karim case
- High Court ruling may raise future PI payouts
- The Legal Services Bill should simplify the process for lower-value
loss claims
- Insurers remain reluctant to offer midwives professional indemnity
insurance, despite proposed law changes
- Chapter 3: Distribution
- Introduction
- Brokers continued to dominate the distribution of commercial insurance
- National brokers have lost distribution market share to the direct
channel, chain brokers and telebrokers
- The direct channel increased its share of commercial insurance GWP by
1% in 2006
- Affinity groups remain a small channel for the distribution of
commercial insurance
- Banks and building societies continue to play a small role in the
distribution of commercial insurance
- Professional indemnity distribution is likewise dominated by the broker
model
- Professional indemnity insurance is predominantly distributed through
the broker channel
- Marsh remains the largest distributor of solicitors' and lawyers'
professional indemnity
- Brokers with a regional presence are strong in the professional
indemnity insurance market
- Professional indemnity players are looking to the online platform to grow
their business
- The internet has become an increasingly popular method for attracting
PI business
- Liberty began offering a PI website facility for brokers
- Exclusivity deals and MGA arrangements are blurring the boundaries
between insurers and brokers
- RSA intends to make PI available through three channels
- A significant proportion of SMEs are open to purchasing their insurance
via the internet or phone
- Many SMEs considering a telephone purchase do so because of its
convenience
- However, many SMEs remain unwilling to purchase their insurance over
the telephone
- Over a third of SMEs would consider making a purchase online
- Less than half of SMEs would be willing to purchase their PI cover
online
- Chapter 4: Competitive Dynamics
- Introduction
- Underwriters are looking at ways to enter the market or expand their
existing professional indemnity offering
- AIG launched a regional assault on the solicitors' PI market
- AXA aims to build up professional indemnity share among small businesses
- Allianz Commercial looks to set up new PI team
- Dual expands PI offering
- RSA relaunched its PI offering in summer 2007
- Despite exiting from solicitors' professional indemnity,Hiscox has been
active within the professional indemnity market
- Hiscox agreed to provide capacity for the PI business of Collegiate
Underwriting and took a large stake in Allison & Partners
- Lloyd' s share of the professional indemnity market continues to be eroded
by the company market, although the rate of decline is slowing slightly
- Lloyd' s continues to lose market share in the professional indemnity
market
- New Hampshire remained dominant in the professional indemnity market
- Average loss ratios deteriorated between 2006 and 2007
- Chapter 5: The Future Decoded
- Introduction
- The market is expected to harden early in 2009 and GWP will grow strongly
- A variety of factors are likely to contribute towards GWP growth during
the forecast period, however, premium rates are expected to have the
greatest impact
- GWP is expected to experience strong growth from 2009 until the end of
the forecast period
- APPENDIX
- Definitions
- Brokers
- National brokers
- Other intermediaries & brokers
- Chain brokers & telebrokers
- Employers' liability
- Professional indemnity
- Directors' and officers' liability
- Earned premiums
- GWP
- NWP
- Methodology
- Primary and secondary research
- Data on the Lloyd' s market
- SynThesys Non-Life database (GEP/GWP)
- Datamonitor' s SME Insurance Survey Q1 2008
- Competitor estimates
- Professional indemnity market size
- Further reading
- Ask the analyst
- Datamonitor consulting
- Disclaimer
- List of Tables
- Table 1: Estimated professional indemnity premium income, 2003-07
- Table 2: Market share of distribution channels in the commercial general
insurance market, 2003−06
- Table 3: Lloyd' s premium income and share of the UK professional
indemnity market, 2002-06
- Table 4: The top 10 professional indemnity players by market share,
2002-07 (%)
- Table 5: The top 10 professional indemnity players by income, 2002-07
- Table 6: Gross loss ratios for the top 10 professional indemnity
insurers, 2002-07
- Table 7: Gross claims incurred by the top 10 professional indemnity
insurers, 2002-07
- Table 8: Key variables affecting the professional indemnity insurance
market, 2007-2012f
- Table 9: Forecast GWP for professional indemnity insurance, 2002-12f
- Table 10: Q: "What business sector are you involved in?"
- Table 11: Q: "How large is your company in terms of number of
employees?"
- Table 12: Q: "How large is your company in terms of turnover?"
- List of Figures
- Figure 1: In 2007, the professional indemnity market declined for the
third year in a row
- Figure 2: National brokers dominate the distribution of commercial
general insurance in the UK in terms of GWP
- Figure 3: Marsh has the largest share of professional indemnity
distribution in the legal channel
- Figure 4: Most SMEs hold an employers' liability and public liability
policy
- Figure 5: Many insurers and brokers now quote and sell professional
indemnity online
- Figure 6: The convenience factor appeals to many SMEs prepared to
purchase insurance over the phone
- Figure 7: A significant proportion of SMEs would not consider a telephone
purchase because they simply prefer face-to-face
- Figure 8: A significant proportion of SMEs would consider a purchase
online in a bid to save money
- Figure 9: SMEs show a greater inclination to purchase employers'
liability and public liability via the telephone and internet
- Figure 10: Lloyd' s share of the market fell every year between 2002 and
2006
- Figure 11: In 2007, New Hampshire was the largest company player in
professional indemnity insurance
- Figure 12: In 2007, there was a large variance between the loss ratios
for the top 10 professional indemnity providers, with an average loss ratio
of 70.8%
- Figure 13: GWP is set to record moderate growth in 2008 before rates turn
in 2009 and GWP experiences robust growth
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